Can firm subsidies spread growth?

Andrieu, Elodie and Morrow, John (2024) Can firm subsidies spread growth? CEP Discussion Papers (CEPDP2035). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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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.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	F - International Economics > F1 - Trade > F15 - Economic Integration H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
Date Deposited:	06 Feb 2025 13:45
Last Modified:	06 Feb 2025 13:45
URI:	http://eprints.lse.ac.uk/id/eprint/126775

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