Sustainable Employment Creation through the Polish Investment Zone in Lagging Regions

Abstract

The article aims to identify the firm-level effects of public support within the Polish Investment Zone (PIZ) on firms’ employment located in lagging regions of Poland, signalling insights into sustainable employment creation. Utilising a difference-in-differences framework and accounting for controls, including the firms’ size, age, leverage, other public aid programmes, subsidies, and firm-level fixed effects, our objective is to ascertain the average treatment effects (ATEs) of the programme, particularly concerning the creation of additional workplaces. To ensure the reliability of our findings, we conducted robustness checks utilising alternative econometric approaches and scrutinise changes in the duration of both the pre- and post-treatment periods. No significant ATEs were observed in the year of the treatment or in one to three years following treatment. This outcome remains robust to variations in the econometric approach, the set of variables considered, and alterations in the length of both pre- and post-treatment periods. This article contributes to an ongoing discussion marked by a lack of consensus regarding the effectiveness of special economic zones in fostering sustainable employment and reducing unemployment rates by presenting the effects of the PIZ and directing policy attention towards more qualitative aspects of created workplaces, fostering sustainable employment.