Innovation capabilities in the private sector: evaluating subsidies for hiring s&t workers in Spain

This paper evaluates the effectiveness of a public programme intended to improve innovation capabilities in the private sector by subsidizing the hiring of R&D personnel. Using information from the programme management database, we study factors associated with the duration of contracts and their transformation into open-ended contracts, a basic aim of the programme. We explore the characteristics of subsidies, individuals, entities and projects related to the eventual stabilization of the new R&D employees, when the subsidies had ended. The programme was found to strengthen R&D capacity in recipient firms —above all in technology centres— yet only about half of the subsidized short term contracts had been converted into permanent contracts by the end of their second year.