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 … support these regions or sectors is to pay employment subsidies. We present evidence showing that capital subsidies are …

sunk in zombie firms is associated with lower investment and employment growth of the typical non-zombie firm and less … investment and multi-factor productivity growth …