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Firm Subsidies, Wages and Labor Mobility

Author

Listed:
  • Maliranta, Mika
  • Määttänen, Niku
  • Pajarinen, Mika

Abstract

The bulk of innovation subsidies in Finland are allocated to firms in industries where the employment share of “innovators,” i.e., workers who are specialized in R&D&I, is very high. The average subsidy per employee is typically the highest among young firms. At the firm level, an increase in innovation subsidies is typically associated with an inflow of innovators from high-productivity firms. These findings suggest that innovation subsidies contribute to economic renewal and the diffusion of knowledge between firms. Non-innovation subsidies, in contrast, appear to support established industry structures: a large share of them has been granted to relatively old firms within “traditional” manufacturing industries. Since non-innovation subsidies are systematically allocated to different types of firms than innovation subsidies, they may also crowd out resources from firms that receive innovation subsidies, thereby overriding some of the possible beneficial effects of innovation subsidies.

Suggested Citation

  • Maliranta, Mika & Määttänen, Niku & Pajarinen, Mika, 2016. "Firm Subsidies, Wages and Labor Mobility," ETLA Reports 60, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:60
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    File URL: http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-60.pdf
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    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. Francesco Daveri & Olmo Silva, 2004. "Not only Nokia: what Finland tells us about new economy growth [‘The role of Nokia in the Finnish economy’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 118-163.
    3. Mika Maliranta & Pierre Mohnen & Petri Rouvinen, 2009. "Is inter-firm labor mobility a channel of knowledge spillovers? Evidence from a linked employer--employee panel," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 18(6), pages 1161-1191, December.
    4. Bagger, Jesper & Maliranta, Mika & Määttänen, Niku & Pajarinen, Mika, 2016. "Innovator Mobility in Finland and Denmark," ETLA Reports 48, The Research Institute of the Finnish Economy.
    5. Francesco Daveri & Olmo Silva, "undated". "Not Only Nokia," Working Papers 222, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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    Cited by:

    1. Aalto, Eero & Gustafsson, Robin, 2020. "Innovation Promotion Rationales and Impacts – A Review," ETLA Reports 99, The Research Institute of the Finnish Economy.

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    More about this item

    Keywords

    Firm subsidies; Innovation; Productivity; Labor mobility;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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