Uwe Cantner () (Friedrich-Schiller-University Jena, Department of Economics, Chair of Economics/Microeconomics) Sarah Kösters () (Friedrich-Schiller-University Jena, Department of Economics, DFG RTG 1411 "The Economics of Innovative Change")
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The present paper investigates the effectiveness of R&D subsidies given to start-ups. Taking an aggregate view rather than evaluating a single program, we estimate the impact of R&D subsidies on start-ups' employment growth and their patent output. A unique data set on start-ups in the East German county of Thuringia allows us to focus on those start-ups that conduct R&D within the first three business years. We conduct propensity score matching to address the selection bias between subsidized and non-subsidized start-ups. We find that R&D subsidies lead to an increase in employment growth of about 66%. Furthermore, subsidized start-ups show a 2.8 times higher patent output. These estimates provide evidence for the additionality of R&D subsidies within the first three business years. Moreover, our analysis points to the special group of academic spin-offs which excels in the novelty of business ideas and patent activity. For some of these high-tech start-ups, no non-subsidized counterparts can be found. This might be attributed to the policy focus on academic spin-offs, which has led to a successful targeting of R&D support schemes.
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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek in its series Jena Economic Research Papers in Economics with number
2009-027.
Find related papers by JEL classification: O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship H50 - Public Economics - - National Government Expenditures and Related Policies - - - General C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
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