Winners and Losers of Technology Grants: Evidence on Jobs and Skills
131 Pages Posted: 27 Apr 2022 Last revised: 24 Jan 2025
Date Written: May 6, 2022
Abstract
Industrial policies are widespread, but evidence on their workforce effects remains limited. We examine the impact of EU technology subsidies on employment and skill demand in Finnish SMEs, 1994–2018. The subsidies fund new machinery, including robots and CNC machines. Comparing closely matched grant winners and losers, we find that receiving a grant increased employment without changing skill composition. Leveraging novel application text data and machine learning, we match firms, analyze their plans, and show that subsidies primarily supported expansion, such as launching new products, rather than automating work. In contrast, analysis of a broader sample of manufacturing firms outside the program reveals that IT investments are more strongly associated with skill upgrading than machinery investments, suggesting that different technologies may impact jobs differently. Our findings indicate that machinery grants can create opportunities for non-college-educated workers.
Keywords: technology, labor demand, skills, industrial policy
JEL Classification: J23, J24, O33, O25, H25
Suggested Citation: Suggested Citation
Hirvonen, Johannes and Stenhammar, Aapo and Tuhkuri, Joonas, Winners and Losers of Technology Grants: Evidence on Jobs and Skills (May 6, 2022). Available at SSRN: https://ssrn.com/abstract=4081625 or http://dx.doi.org/10.2139/ssrn.4081625
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