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Do subsidized new firms survive longer? Evidence from a counterfactual approach

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  • Guido Pellegrini
  • Teo Muccigrosso

Abstract

Do subsidized new firms survive longer? Evidence from a counterfactual approach. Regional Studies. This study provides a statistically robust evaluation of the impact of capital subsidies on the survival of start-ups in Italy. The analysis considers the subsidies provided by the main Italian regional policy, Law 488/1992, during 1996–2009. By exploiting an unusual characteristic of the L. 488 selection process, a quasi-experimental design with high internal validity – the regression discontinuity design – is applied for the first time to the survival analysis. The results show a lower default risk in subsidized start-ups. These findings contradict the view that start-ups receiving L. 488 assistance simply used the grant funding to delay exit.

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  • Guido Pellegrini & Teo Muccigrosso, 2017. "Do subsidized new firms survive longer? Evidence from a counterfactual approach," Regional Studies, Taylor & Francis Journals, vol. 51(10), pages 1483-1493, October.
    • Handle: RePEc:taf:regstd:v:51:y:2017:i:10:p:1483-1493
    DOI: 10.1080/00343404.2016.1190814
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    2. Bofinger, Peter & Geißendörfer, Lisa & Haas, Thomas & Mayer, Fabian, 2023. "Credit as an instrument for growth: A monetary explanation of the Chinese growth story," W.E.P. - Würzburg Economic Papers 107, University of Würzburg, Department of Economics.
    3. Ma del Pilar Muñoz Dueñas & Antonio Vaamonde Liste & Maria do Rosário Cabrita, 2020. "The Survival of Cultural Firms: A Study of Multiple Accounting Parameters in Spain," Sustainability, MDPI, vol. 12(3), pages 1-14, February.
    4. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas, 2021. "Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession," Small Business Economics, Springer, vol. 56(1), pages 83-103, January.
    5. Nathaniel Lane, 2020. "The New Empirics of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 209-234, June.
    6. Muraközy, Balázs & Telegdy, Álmos, 2023. "The effects of EU-funded enterprise grants on firms and workers," Journal of Comparative Economics, Elsevier, vol. 51(1), pages 216-234.
    7. Amina Ika Micah, 2022. "Three essays on access to credit and financial shock in Nigeria," Economics PhD Theses 0422, Department of Economics, University of Sussex Business School.
    8. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas & Janette Walde, 2022. "Small matching grants for women entrepreneurs: lessons from the past recession," Small Business Economics, Springer, vol. 59(1), pages 117-142, June.
    9. Ting Feng & Zhongyi Xue, 2023. "The impact of government subsidies on corporate resilience: evidence from the COVID-19 shock," Economic Change and Restructuring, Springer, vol. 56(6), pages 4199-4221, December.
    10. Sebastian Siegloch & Nils Wehrhöfer & Tobias Etzel, 2022. "Spillover, Efficiency and Equity Effects of Regional Firm Subsidies," ECONtribute Discussion Papers Series 210, University of Bonn and University of Cologne, Germany.
    11. Ungerer, Christina & Reuther, Kevin & Baltes, Guido, 2021. "The lingering living dead phenomenon: Distorting venture survival studies?," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    12. Pelucha, Martin & Kveton, Viktor & Potluka, Oto, 2019. "Using mixed method approach in measuring effects of training in firms: Case study of the European Social Fund support," Evaluation and Program Planning, Elsevier, vol. 73(C), pages 146-155.
    13. Yanfeng Lou & Yezhuang Tian & Kai Wang, 2020. "The Spillover Effect of US Industrial Subsidies on China’s Exports," Sustainability, MDPI, vol. 12(7), pages 1-12, April.
    14. Cerqua, Augusto & Pellegrini, Guido, 2022. "Decomposing the employment effects of investment subsidies," Journal of Urban Economics, Elsevier, vol. 128(C).

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