Instrumental Variable Fixed Effects Estimator Dependent variable: Log(Number of layers)

||**(1**|**)**|**(2**|**)**|**(**|**3)**|
|---|---|---|---|---|---|---|
|**Variables**|**2nd**|**1st**|**2nd**|**1st**|**2nd**|**1st**|
|Peiex|0.2010||0.1545||0.1720||
||(0.0543)||(0.0521)||(0.0500)||
|(A) Number NO by State||0.0034<br>||0.0036<br>||0.0036<br>|
|||(0.0003)<br>||(0.0003)<br>||(0.0003)<br>|
|(B) lag(sector-region Apex)||-0.0046<br>||-0.0047<br>||-0.0047<br>|
|||(0.0013)||(0.0014)||(0.0014)|
|Interaction Term (A)*(B)||0.0018||0.0018||0.0018|
|||(00005)||(00005)||(00005)|
|Other programs Apex|0.0371|.<br>-0.0635|0.0329|.<br>-0.0638|0.0240|.<br>-0.0639|
||(0.0092)|(0.0148)|(0.0091)|(0.0149)|(0.0085)|(0.0149)|
|Firms’ age|0.0098|0.0002|0.0116|-0.0008|0.0099|-0.0008|
||(0.0010)|(0.0006)|(0.0010)|(0.0007)|(0.0010)|(0.0007)|
|Firms’ age<sup>2</sup>|-0.0002|0.00004|-0.0002|0.0000|-0.0002|0.0000|
||(0.00002)|(0.00001)|(0.0000)|(0.0000)|(0.0000)|(0.0000)|
|log(number employees)_t−_2|0.0288|0.0037|0.0268|0.0036|0.0202|0.0035|
||(0.00121)|(0.00060)|(0.0012)|(0.0006)|(0.0012)|(0.0006)|
|log(wage)_t−_2|||0.0004<br>|0.0011<br>|0.0012<br>|0.0011<br>|
||||(0.0012)|(0.0003)|(0.0012)|(0.0003)|
|log(schooling)_t−_2|||-0.0122|-0.0031|-0.0126|-0.0031|
||||(0.0036)|(0.0011)|(0.0035)|(0.0011)|
|log(nbr exporters - region)|||0.0021|0.0018|0.0023|0.0018|
||||(0.0017)|(0.0021)|(0.0016)|(0.0021)|
|share(engineer and R&D)_t−_2|||0.0229|0.0020|0.0171|0.0020|
||||(0.0075)<br>|(0.0013)<br>|(0.0062)<br>|(0.0013)<br>|
|average experience _t−_2|||-0.0039|-0.0001|-0.0038|-0.0001|
||||(0.0001)|(0.0000)|(0.0001)|(0.0000)|
|number of subsidiaries _t−_2|||0.0299<br>|0.0042<br>|0.0273<br>|0.0042<br>|
||||(0.0030)|(0.0016)|(0.0028)<br>|(0.0016)<br>|
|Manager exp _M_1|||||0.0235|0.0030|
||||||(0.0068)|(0.0044)|
|Manager exp _M_2|||||0.0239|-0.0036|
||||||(0.0065)<br>|(0.0076)<br>|
|Manager exp _M_3|||||0.0244|-0.0024|
||||||(0.0045)|(0.0032)|
|Manager _M_1 N-_Q_4|||||0.1701|0.0001|
||||||(0.0113)|(0.0018)|
|Manager _M_1 F-_Q_4|||||0.0531|0.0006|
||||||(0.0293)|(0.0020)|
|Manager _M_2 N-_Q_4|||||0.1176<br>|-0.0010<br>|
||||||(0.0227)|(0.0012)|
|Manager _M_2 F-_Q_4|||||0.1175|0.0004|
||||||(0.0585)|(0.0028)|
|Manager _M_3 N-_Q_4|||||0.2554<br>|-0.0008<br>|
||||||(0.0098)|(0.0013)|
|Manager _M_3 F-_Q_4|||||0.0057|-0.0050|
||||||(0.0282)|(0.0030)|
|Additional Manager’s control*|||||||
|Managers _Q_2-_Q_3|NO|NO|NO|NO|YES|YES|
|Firms Fixed Efect|YES|YES|YES|YES|YES|YES|
|Sector-Year Fixed Efect|YES|YES|YES|YES|YES|YES|
|Number Obs.|729,340|729,340|729,272|729,272|729,272|729,272|
|Number of clusters (Firms)<br>Nbr Variables|240,009<br>76|617<br>76|207,415<br>82|616<br>82|207,415<br>103|616<br>103|

Table 7: Instrumental variable fixed effects model. Dependent variable: number of layers Note: Standard errors clustered at the state-sector level in the first stage and at the firm level in the second stage are reported in parentheses. Managers are classified by occupations equivalent to CEOs and Directors (M1), Senior staff (M2) and Supervisors (M3). N and F refer to their nationalities, where N(Nationals) and F(Foreigners). Additional Manager’s control (Managers _Q_ 2- _Q_ 3) refers to dummy variables for managers in the second and third quartile of wage distribution. The variable lag(sector-region Apex) refers to the lag of the number of firms that were assisted by other Apex programs in the previous year. The variables used as instruments are also significant in the first stage when the standard errors are clustered at the state level.