Investment Grants and Firms' Productivity: How Effective Is a Grant Booster Shot?

Fernando Alexandre (falex@eeg.uminho.pt), Miguel Chaves and Miguel Portela (miguel.portela@eeg.uminho.pt)
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Fernando Alexandre: University of Minho
Miguel Chaves: University of Minho
Miguel Portela: University of Minho

No 15779, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the effect of awarding a second investment grant to the same firm. We implement a Regression Discontinuity Design strategy using a very rich firm-level administrative database, which allows us to link applications to grants and their scores to firms' performance. Overall, our results show a positive and significant impact of an investment grant booster shot on firms' labour productivity. This effect is significantly larger than the effect of a single grant. A more granular analysis shows a strong impact of awarding a second grant to small-sized firms. However, we found no effect on micro, medium and large-sized firms. Our results suggest that the characteristics of the targeted firms, namely firm size, matter for the effectiveness of awarding a second grant to the same firm.

Keywords: multiple treatments; investment grants; industrial policy; productivity (search for similar items in EconPapers)
JEL-codes: D22 H25 L25 L52 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2022-12
New Economics Papers: this item is included in nep-eff, nep-ent, nep-eur and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published online in: Small Business Economics , 22 August 2024

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