Multi-establishment Firm Structure, Subsidies and Spillovers

with Elodie Andrieu (Paris School of Economics)

How do firms diffuse resources, and does this result in spillovers far from headquarters?  We show subsidies induce French firms to hire new workers, mainly in new establishments and often in new commuting zones, with little evidence of reallocation.  The most hiring responsive occupations are techies and support workers in line with R+D targeting. We estimate a subsidy employment spillover elasticity of .11 at the commuting zone level within industry, but weak effects in the commuting zone.