Future versus Today’s Improvements: The Trade-Off of Place-Based Policies

joint with Max Bres and David Koll (LIDAM discussion paper 2014/19).

This paper provides causal evidence on the impact of subsidy re-allocation, exploiting European-level policy changes in France. In response to more laisser-faire, policy makers re-allocate subsidies away from research and development to mainly low-skilled manufacturing and service
sectors, triggering persistent improvement of employment, mainly through increased
low-skilled manufacturing employment and at the expense of R&D related
occupations. In the long term, though, labor income and productivity decrease.

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