Can firm subsidies spread growth?

Elodie Andrieu and John Morrow

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: How do firms diffuse resources and do they spillover outside headquarter intensive areas? We show R&D subsidies induce French firms to hire new workers, often in new establishments and commuting zones. Using subsidy induced labor demand shocks and past employment patterns, we estimate a within industry spillover elasticity of .26 to non-subsidy firms, rising to .35 for openings outside of headquarter areas. Spillovers are also significant across firm branches and for firms. While subsidies are nominally awarded to headquarters, firms expand to distribute spillovers more broadly.

Keywords: multi-establishment firms; subsidies; directed growth; spillovers (search for similar items in EconPapers)
Date: 2024-09-24
New Economics Papers: this item is included in nep-bec, nep-eec, nep-ent, nep-geo, nep-sbm, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp2035

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