Macroeconomics

Labour economics

Percentage point

Construct (python library)

Exploit

Computer security

Economics

Market economy

Computer science

Business

Total factor productivity

Subsidy

Mathematics

Politics

Political science

Econometrics

Productivity

Geometry

Unemployment

Instrumental variable

Point (geometry)

Programming language

Finance

Investment (military)

American Economic Review

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)

Some Causal Effects of an Industrial Policy