Do Public Subsidies Have an Impact on New Firm Survival? An Empirical Study with French Data

Abstract

This paper deals with the impact of social contributions and tax cuts (which are considered as operating subsidies) on new firms' probability of survival and economic performance. We use a rich matched database of French firms that were newly created in 1998 and that include entrepreneurs' individual characteristics and firm economic and financial variables. We implement propensity score matching models and show that (i) subsidized firms are more likely to survive after the first two years; (ii) bank loans increase the probability of survival, be they subsidized or not; and (iii) operating subsidies allow firms to increase their turnover. However, no significant effects of these subsidies on other performance criteria are found.

Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession

“…Burger and Rojec (2018) in Slovenia find anti-crisis measures to have a positive impact only on the number of employees, but not on other firm performance measures. Notable impact analyses of grants for young firms have been conducted in the United States (Lerner, 1999), Germany (Almus & Prantl, 2002;Cantner & Kösters, 2012;Czarnitzki & Delanote, 2015;Pfeiffer & Reize, 2000), Belgium (Decramer & Vanormelingen, 2016), Italy (Colombo, Giannangeli & Grilli, 2013;Del Monte & Scalera, 2001;Pellegrini & Muccigrosso, 2017), France (Crepon & Duguet, 2003;Désiage, Duhautois & Redor, 2010), Spain (Busom, 2000;González & Pazó, 2008;Huergo & Trenado, 2010;Rojas & Huergo, 2016;Segarra-Biasco & Teruel, 2016), Finland (Koski & Pajarinen, 2013) and Argentina (Butler, Galassi & Ruffo, 2016). Most papers (e.g.…”

The more subsidies, the longer survival? Evidence from Chinese manufacturing firms

“…Furthermore, some researchers are also interested in the relationship between government subsidies and firm survival (see, e.g., Battistin, Gavosto, & Rettore, ; Oh, Lee, Heshmati, & Choi, ; Desiage, Duhautois, & Redor, ). Battistin et al.…”

“…More recently, Desiage et al. () study the impact of public subsidies on French new firm survival, their results indicate that subsidized firms survive longer than nonsubsidized firms, and bank loans help to increase the probability of survival whether the firms are subsidized or not. Obviously, the evidence on the relationship between government subsidies and firm survival are mixed, more importantly, none of them directly touches on whether government subsidies with different intensities affect firm survival differently, which is one of the main focuses of the present study.…”

Supporting the transition from unemployment to self-employment—a comparative analysis of governmental support programs across Europe

“…For this purpose, several active labor market programs (ALMPs) have been developed across Europe, providing support to those seeking to start a business after a period of unemployment. Despite constituting a relatively small portion of national active labor market expenses (1-6 percent of ALMP spending; OECD, 2000), firms established by the previously unemployed make up a large proportion of all new firms as indicated by the 30 percent in Sweden (Statistics Sweden, 1998), and more than 25 percent in France (Désiage, Duhautois, and Redor, 2010). The political and economic importance of these programs has led to an increased scholarly attention over the past years (Benus, 1994;Block and Sandner, 2006;Corral, Isusi, and Stack, 2006;Bosma et al, 2008;Caliendo and Kritikos, 2009;Block and Wagner, 2010) and it is likely that their political importance will further rise due to ongoing labor market instabilities (ILO, 2002).…”