Effects of subsidizing the firstemployee - Empirical evidencefrom Finland

Annika Nivala
Additional contact information
Annika Nivala: University of Turku

No 129, Discussion Papers from Aboa Centre for Economics

Abstract: This paper studies the effects of a first employee wage subsidy imple-mented in parts of Finland in 2007–2011 using the universe of Finnishfirms. The subsidy, amounting to 30% of the wage costs of the firstemployee in the first year and 15% in the second, was targeted to en-trepreneurs without hired employees. The target group accounts forover half of the firm population. Comparing the firms in the eligiblearea to firms in the neighboring ineligible area, I find precisely esti-mated zero effect on the probability of becoming an employer and otherfirm outcomes. The zero average effect seems to be due to low take-upof the subsidy highlighting the role of take-up in effectiveness of busi-ness subsidies. Sole proprietor, large and new firms were more likelyto use the subsidy and the subsidized firms seemed to grow more incomparison to eligible firms that did not use the subsidy.

Keywords: Business subsidies; Wage subsidies; Firm behavior; Labor demand; Entrepreneurship; Small Business (search for similar items in EconPapers)
JEL-codes: H25 H32 J23 J38 M51 (search for similar items in EconPapers)
Pages: 55
Date: 2019-12
New Economics Papers: this item is included in nep-ent, nep-lma and nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ace-economics.fi/kuvat/dp129.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tkk:dpaper:dp129

Access Statistics for this paper

More papers in Discussion Papers from Aboa Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by Susmita Baulia ().