Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant Level Data

Holger Görg and Eric Strobl ()

No 1606, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines whether financial assistance provided by government induces firms to spend more of their own funds on training expenditures, using plant level data for the Republic of Ireland. We pay particular attention to the potential problems in such an evaluation study, namely selectivity and endogeneity, by first identifying a valid counterfactual for grant receiving plants via a matching estimator and then employing a difference-in-differences technique on this matched sample. Our results show that there are differences in causal effects between domestic and foreign owned plants. For the former we find clear evidence that grant receipt stimulates private expenditure, while there are no statistically significant effects for foreign-owned plants based in Ireland.

Keywords: difference-in-differences; training; government grants; matching (search for similar items in EconPapers)
JEL-codes: H25 J24 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005-05
New Economics Papers: this item is included in nep-eec and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Southern Economic Journal, 2006, 72(4), 860-876

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Journal Article: Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant‐Level Data (2006)
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