Do Business Subsidies Facilitate Employment Growth?

The authors use data from 15508 Finnish companies with 10 or more employees for the years 2003-2008 to explore the relationship between employment growth and three endogenously determined business subsidy types (i.e. employment subsidy, R&D subsidy and other business subsidies). They find a positive contemporary relationship between all business subsidy types and employment growth. These findings suggest that R&D subsidies further contribute to the firms' employment for one year after and employment and other subsidies for three years after the reception of subsidies.