Heterogeneous effects of investment grants: Evidence from a new measurement approach

This paper estimates establishment-level employment effects of investment grants in one of the German Federal States receiving the most support. We analyze general treatment effects, as well as the influence of heterogeneity in the characteristics and economic environment of the establishment on its employment development. Modifying the standard matching and difference-in-differences approach, we develop a new procedure that is particularly useful for evaluating funding programs with individual treatment phases within the period of observation. Our data basis combines treatment-related, establishment-specific and regional information from different sources. The results suggest that investment grants have a positive influence on the development of employment in establishment in both absolute and standardized figures (i. e. in relation to the amount of subsidy received) - with considerable effect heterogeneity.