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The role of business subsidies in job creation of start-ups, gazelles and incumbents

  • Heli Koski

    ()

  • Mika Pajarinen

This study contributes to the empirical literature concerning the role of business subsidies in job creation. Our empirical analysis, using an extensive firm-level data, suggests that the impact of business subsidies on employment growth differs more between high-growth start-ups and other firms than between start-ups and incumbents. On average, all subsidies relate positively to the contemporary employment growth for both start-ups and incumbents. Furthermore, after subsidy reception, the employment of both start-ups and older incumbents receiving employment or other subsidies grows more than that of non-subsidized firms. However, we find that business subsidies do not provide a significant additional boost to either contemporary or after-subsidy growth for young high-growth companies. There are apparently some other factors that promote growth in young high-growth firms; these factors help foster strong growth in many cases with or without subsidies. Copyright Springer Science+Business Media, LLC. 2013

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File URL: http://hdl.handle.net/10.1007/s11187-012-9420-5
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Article provided by Springer in its journal Small Business Economics.

Volume (Year): 41 (2013)
Issue (Month): 1 (June)
Pages: 195-214

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Handle: RePEc:kap:sbusec:v:41:y:2013:i:1:p:195-214
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100338

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