2022/09/24 by Balázs Muraközy, Álmos Telegdy · 17 citations
Economics, Econometrics and Finance · Social Sciences · #Business #Demographic economics #Economic Policies and Impacts #Economic growth #Economics #Innovation Policy and R&D #Investment (military) #Labour economics #Market economy #Productivity #Regional Development and Policy #Subsidy #Total factor productivity #Wage #Wage growth
paper · pdf · doi:10.1016/j.jce.2022.09.001
published in Journal of Comparative Economics 51(1), 216-234 (Elsevier BV)
openalex publication_date 2022/09/24 · crossref created 2022/09/24 · crossref issued 2023/03/01 · crossref published 2023/03/01 · crossref published-print 2023/03/01 · crossref deposited 2025/09/27 · openalex created_date 2025/10/10 · crossref indexed 2026/07/31 · openalex updated_date 2026/08/02
This paper investigates the effects of non-repayable enterprise grants on Hungarian SMEs, financed from the European Union’s Structural and Cohesion Funds between 2004–2014. Comparing firm- and worker level outcomes of successful and unsuccessful applicants, we find that subsidized firms increase their employment, sales, capital-to-labor ratio and labor productivity, but we find conflicting results for total factor productivity. The skill composition of workers is not affected by the grant, but wages increase, although only for skilled workers and especially managers. These results suggest that the program generates additional investment, but that investment leads to limited technology upgrading at best. According to our simple calculations, the cost of creating an additional job with this program was equivalent to 3 years average wage and each year’s grants contributed to aggregate SME labor productivity growth by 0.2-0.6 percentage points — with an annual cost often in excess of 1 percent of total SME value added.