country micro simulation model to analyse how shocks on market income and employment are mitigated by taxes and transfers. We …

support these regions or sectors is to pay employment subsidies. We present evidence showing that capital subsidies are … empirically much more important than employment subsidies. We then discuss possible explanations for the dominance of investment …-firm bargaining also gives rise to underinvestment. In this framework, it turns out that an investment subsidy dominates an employment …