Premium
Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant‐Level Data
Author(s) -
Görg Holger,
Strobl Eric
Publication year - 2006
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2006.tb00742.x
Subject(s) - counterfactual thinking , subsidy , endogeneity , receipt , propensity score matching , government (linguistics) , economics , difference in differences , average treatment effect , matching (statistics) , government expenditure , sample (material) , public economics , demographic economics , econometrics , public finance , macroeconomics , psychology , accounting , market economy , social psychology , linguistics , statistics , philosophy , chemistry , mathematics , chromatography
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, whereas there are no statistically significant effects for foreign‐owned plants based in Ireland.