Can firm subsidies spread growth?

Elodie Andrieu and John Morrow

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
JEL-codes: F15 H25 L23 L25 O31 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2024-09-24
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126775

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