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The effect of grant receipt on start-up size: Evidence from plant level data

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  • Sourafel Girma
  • Holger Görg
  • Aoife Hanley
  • Eric Strobl

Abstract

In this paper we use plant level data on the start-up size of new plant entries and detailed information on the grants received by such plants in order to investigate whether grant receipt encourages plants to start-up with more employment than without support. The data relate to manufacturing plants in the Republic of Ireland, where industrial policy has a long history of using discretionary grants to encourage employment growth. We use a matching procedure to deal with the issue of selectivity into grant receipt, and a quantile regression estimator to allow for different effects of grants on plants depending on their position in the start-up size distribution. Our results provide evidence that grants do indeed encourage plants to start-up larger. We also find that this effect is generally higher for foreign than for domestic plants, and that it differs for plants at different quantiles of the start-up size distribution

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File URL: http://www.ifw-members.ifw-kiel.de/publications/the-effect-of-grant-receipt-on-start-up-size-evidence-from-plant-level-data/the-effect-of-grant-receipt-on-start-up-size-evidence-from-plant-level-data
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1607.

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Length: 35 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:kie:kieliw:1607

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Keywords: grants; subsidies; entry; start-up size;

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References

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Cited by:
  1. Alex Coad & Julian Frankish & Paul Nightingale & Richard G. Roberts & David J. Storey, 2012. "Business Experience and Start-up Size: Buying More Lottery Tickets Next Time Around?," SPRU Working Paper Series 203, SPRU - Science and Technology Policy Research, University of Sussex.

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