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Sailing Through Troubled Waters: Evidence from Support Discontinuities to Firms in Times of Crisis

Author

Listed:
  • Martins, Ana

    (Technical University of Lisbon)

  • Pereira dos Santos, João

    (ISEG)

  • Pozzobon, Fernando

    (Universidade Técnica de Lisboa)

Abstract

We estimate the causal effect of APOIAR, a targeted COVID-19 support initiative, on firm survival and performance. Using sharp and fuzzy regression discontinuity designs and three administrative datasets, we find that eligible firms experienced a short-term profitability increase in 2021, with €1 of support raising net income by €0.658. These effects did not persist into 2022, and we observe no significant changes in turnover or cost reduction, suggesting the profitability gains were mechanically driven by the subsidy. The funds were particularly used by ex-ante less productive, more indebted firms with limited liquidity

Suggested Citation

  • Martins, Ana & Pereira dos Santos, João & Pozzobon, Fernando, 2025. "Sailing Through Troubled Waters: Evidence from Support Discontinuities to Firms in Times of Crisis," IZA Discussion Papers 18136, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18136
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    Keywords

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    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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