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Do government private subsidies crowd out entrepreneurship?

Author

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  • Asif Islam

    (Enterprise Analysis Unit, The World Bank, Washington DC, USA)

Abstract

Although several studies have found a negative relationship between government spending and entrepreneurship, much debate remains regarding the components of government spending responsible for this association. We contribute to the literature by specifically exploring the relationship between government private subsidies and entrepreneurship. By combining macro-economic government spending data with individual level entrepreneurship data, we find a negative association between the share of private subsidies and entrepreneurship. However, findings are less straightforward when we delve deeper into the components of private subsidies and its association with different kinds of entrepreneurship.

Suggested Citation

  • Asif Islam, 2014. "Do government private subsidies crowd out entrepreneurship?," European Economic Letters, European Economics Letters Group, vol. 3(1), pages 22-25.
    • Handle: RePEc:ris:eueclt:0023
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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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