UK regulation discourages corporate political donations but is relatively benign in respect of individual donations. Few UK listed companies make political donations but many more company directors do. We use a unique, hand-collected dataset of political donations to examine whether UK corporate political connections are perceived as being created indirectly via directors’ personal donations. Basing our tests on the sensitivity of company returns to opinion polls preceding the 2010 General Election we find that, on average, firms in industries which donate only to the Conservative Party exhibit higher sensitivity to the electoral success of the Conservatives. However, within industries, there is no consistent evidence that the firms which employ directors who make these donations exhibit higher sensitivity than firms which do not. We justify basing our inferences on return sensitivity to polls by confirming that UK domestic political risk, as proxied by opinion poll changes, is priced around General Elections.

We study how industry-level agglomeration economies affect government policy. Using administrative data on firm subsidies in economically lagging regions of Great Britain, we test two alternative hypotheses. Economic geography models imply that firms at an industry's core can sustain higher tax burdens or require lower subsidies than firms in more remote locations. Conversely, political economy models predict firms at the industry's core to be more successful at lobbying government, particularly at the sub-national level, thus obtaining more favourable fiscal treatment. We find that local government agencies structure subsidy offers to favour pre-existing employment in locally agglomerated industries, behaviour more in line with theories of policy capture than with economic geography models.

Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch— hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure and also investment in higher education and university research—likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer run gains.

Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch – hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research – likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains. David Neumark Department of Economics University of California at Irvine 3151 Social Science Plaza Irvine, CA 92697 and NBER dneumark@uci.edu Helen Simpson Department of Economics University of Bristol 8 Woodland Rd Bristol, BS8 1TN United Kingdom Helen.Simpson@bristol.ac.uk

Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch – hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research – likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains.

The Centre for Market and Public Organisation (CMPO) is a leading research centre, combining expertise in economics, geography and law. Our objective is to study the intersection between the public and private sectors of the economy, and in particular to understand the right way to organise and deliver public services. The Centre aims to develop research, contribute to the public debate and inform policy-making. CMPO, now an ESRC Research Centre was established in 1998 with two large grants from The Leverhulme Trust. In 2004 we were awarded ESRC Research Centre status, and CMPO now combines core funding from both the ESRC and the Trust. Abstract Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch – hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research – likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains.

The UK has recently experienced its deepest recession since the Second World War. One feature has been the resilience of employment, which fell far less than GDP. This led to a substantial fall in labour productivity and has given rise to a so-called ‘productivity puzzle’. In this paper, we use firm- and individual-level data to shed new light on these aggregate patterns and we examine changes in firm investment in physical capital and profitability. We provide evidence that labour productivity, investment and firm profitability

. This paper provides new evidence on the effects of overseas FDI on the skill-mix of multinational firms home-country operations. The analysis exploits China's WTO accession to identify the impact of outward investment into a low-wage economy and uses plant-level data to investigate changes in industrial structure within firms driven by plant closures. As predicted by models of vertical FDI, the paper demonstrates that overseas investment in low-wage economies is associated with asymmetric effects on workers in low- and high-skill industries in the home economy and, in particular, with firms closing down plants in low-skill industries. JEL classification: F2

We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate R&D near universities, and whether those that do are more likely to co-operate with, or source knowledge from them. We find that pharmaceutical firms locate R&D near to frontier chemistry research departments, consistent with accessing localized knowledge spillovers, but also linked to the presence of science parks. Chemicals R&D exhibits co-location with materials science departments, with firms within 10 km more likely to directly engage with universities. In other industries we find less, or no evidence of co-location with university research.

We use unique workplace and employee-level data to evaluate a major UK government pilot program to increase qualification-based, employer-provided training for low-qualified employees. We evaluate the program's effect using a difference-in-differences approach. Using data on eligible employers and workers we find no evidence of a statistically significant effect on the take-up of training in the first 3 years of the program. Our results suggest that the program involved a high level of deadweight and that improving the additionality of the subsequent national program is crucial if it is to make a significant contribution toward government targets to increase qualification levels.

This paper investigates the structure of firms’ outward FDI and their behaviour at home in both manufacturing and business services sectors. UK multinationals with overseas affiliates in low-wage economies invest simultaneously in a large number of high-wage countries. I find that more productive multinationals operate in a greater number of countries, consistent with their being able to bear the fixed costs of investing in numerous locations abroad. UK manufacturing plants owned by large-scale, low-wage economy outward investors display lower domestic employment growth, in particular in low-skill activities, consistent with low-wage economy labour substituting for low-skill labour in the UK.