Capital subsidies and job creation in rural areas: A Greek case study

Assesses the job creation effects of capital subsidies provided to small and medium enterprises in rural and lagging areas. The proposed methodology takes account of extensive censoring of job creation among assisted rural firms, endogeneity of the capital stock change resultant from capital subsidies, and the extensive part‐time and seasonal job requirements in rural areas. Capital stock change, as a result of grant aid is negatively related to the decision to create new jobs and to the extent of job creation given that some employment is created. Evidence of this work provides the ground for discussing the effectiveness and implications of using capital subsidies as a job creation instrument within rural development policies.