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R&D and Subsidies at the Firm Level: An Application of Parametric and Semi-Parametric Two-Step Selection Models

  • Katrin Hussinger

    (Centre for European Economic Research ZEW)

This paper analyzes the effects of public subsidies on R&D expenditure in the German manufacturing sector. The focus is on the question whether public R&D funding stimulates or crowds out private investment. Cross sectional data at the firm level is used. By applying parametric and semiparametric selection models, it turns out that public funding increases firms' R&D expenditure. Altough the magnitude of the treatment effect depends on the assumptions imposed by the particular selection model.

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File URL: http://128.118.178.162/eps/pe/papers/0403/0403005.pdf
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Paper provided by EconWPA in its series Public Economics with number 0403005.

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Length: 33 pages
Date of creation: 26 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0403005
Note: Type of Document - pdf; pages: 33
Contact details of provider: Web page: http://128.118.178.162

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  1. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Almus, Matthias & Czarnitzki, Dirk, 2003. "The Effects of Public R&D Subsidies on Firms' Innovation Activities: The Case of Eastern Germany," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 226-36, April.
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  7. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  8. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Working Papers 99023, Stanford University, Department of Economics.
  9. Dirk Czarnitzki, 2005. "The Extent and Evolution of Productivity Deficiency in Eastern Germany," Journal of Productivity Analysis, Springer, vol. 24(2), pages 211-231, October.
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  11. Gallant, A Ronald & Nychka, Douglas W, 1987. "Semi-nonparametric Maximum Likelihood Estimation," Econometrica, Econometric Society, vol. 55(2), pages 363-90, March.
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  13. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  14. Aerts, Kris & Czarnitzki, Dirk, 2004. "Using Innovation Survey Data to Evaluate R&D Policy: The Case of Belgium," ZEW Discussion Papers 04-55, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Klette, T.J. & Moen, J. & Griliches, Z., 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconometric Evaluation Studies," Papers 16/99, Norwegian School of Economics and Business Administration-.
  16. Marcia M Schafgans & Victoria Zinde-Walsh, 2000. "On Intercept Estimation in the Sample Selection Model," STICERD - Econometrics Paper Series /2000/380, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  17. Greene, William H, 1981. "Sample Selection Bias as a Specification Error: Comment," Econometrica, Econometric Society, vol. 49(3), pages 795-98, May.
  18. Toole, Andrew A. & Czarnitzki, Dirk, 2008. "Patent Protection, Market Uncertainty, and R&D Investment," ZEW Discussion Papers 06-056 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. Arvanitis, Spyros & Hollenstein, Heinz & Lenz, Stephan, 2002. " The Effectiveness of Government Promotion of Advanced Manufacturing Technologies (AMT): An Economic Analysis Based on Swiss Micro Data," Small Business Economics, Springer, vol. 19(4), pages 321-40, December.
  20. Jens Matthias Arnold & Katrin Hussinger, 2003. "Export Behavior and Firm productivity in German Manufacturing. A Firm-Level Analysis," Development Working Papers 184, Centro Studi Luca d\'Agliano, University of Milano.
  21. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  22. Dirk Czarnitzki & Kornelius Kraft, 2007. "Are credit ratings valuable information?," Applied Financial Economics, Taylor & Francis Journals, vol. 17(13), pages 1061-1070.
  23. Czarnitzki, Dirk & Kraft, Kornelius, 2000. "Haftungsregeln und Innovation," ZEW Discussion Papers 00-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  24. Czarnitzki, Dirk & Hussinger, Katrin, 2004. "The Link Between R&D Subsidies, R&D Spending and Technological Performance," ZEW Discussion Papers 04-56, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  25. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  26. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
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  39. Marcia M. A. Schafgans, 2000. "On Intercept Estimation in the Sample Selection Model," Econometric Society World Congress 2000 Contributed Papers 0730, Econometric Society.
  40. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
  41. Czarnitzki, Dirk & Fier, Andreas, 2003. "Publicly Funded R&D Collaborations and Patent Outcome in Germany," ZEW Discussion Papers 03-24, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  42. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-18, May.
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