Some Causal Effects of an Industrial Policy
By Chiara Criscuolo, Ralf Martin, Henry G. Overman, John Van Reenen. The American Economic Review, 2019
407 citations recorded by the source corpus.
We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. (JEL E24, G31, H25, L25, L52, R23)
Subfields: Economics and Econometrics, Political Science and International Relations
View Paper: https://www.semanticscholar.org/paper/5eadbc88e20fd92ea1b6764f7306d143cc62e769
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In Economics and Econometrics
- John Van Reenen
- Nicholas Bloom
- Heidi L. Williams
- Eric Ohrn
- Daniel G. Garrett
- Juan Carlos Suárez Serrato
- Philippe Aghion
- Raffaella Sadun
In Political Science and International Relations
Citations in the corpus
- A toolkit of policies to promote innovation (2019, methodology): “Encouragingly, these more direct measures also seem to increase (with a lag) following tax changes (for US evidence, see Lucking 2018 and Akcigit et al. 2018; for the UK, see Dechezlepretre et al. 2016; for China, see Chen et al. 2017; and for Norway, see Bøler et al. 2015).”
- Tax Policy and Local Labor Market Behavior (2019, background): “All three of these studies use similar industry-level identification strategies based on Cummins et al. (1994). The crucial insight is that the types of assets that a business purchases determine the extent to which bonus depreciation affects its investment plans.”
- Place-Based Policies and Spatial Disparities across European Cities (2020, unknown): “For example, Criscuolo et al. (2019) look at the impact of the UK’s Regional Selective Assistance scheme, which provided discretionary grants to manufacturing firms in disadvantaged areas.”