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Do Public Subsidies Have an Impact on New Firm Survival? An Empirical Study with French Data

Author

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  • Lionel Desiage

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)

  • Richard Duhautois

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé)

  • Dominique Redor

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper deals with the impact of social contributions and tax cuts (which are considered as operating subsidies) on new firms' probability of survival and economic performance. We use a rich matched database of French firms that were newly created in 1998 and that include entrepreneurs' individual characteristics and firm economic and financial variables. We implement propensity score matching models and show that (i) subsidized firms are more likely to survive after the first two years; (ii) bank loans increase the probability of survival, be they subsidized or not; and (iii) operating subsidies allow firms to increase their turnover. However, no significant effects of these subsidies on other performance criteria are found.

Suggested Citation

  • Lionel Desiage & Richard Duhautois & Dominique Redor, 2010. "Do Public Subsidies Have an Impact on New Firm Survival? An Empirical Study with French Data," Working Papers halshs-00809709, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00809709
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00809709
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    Cited by:

    1. Srhoj Stjepan & Zilic Ivan, 2021. "“Fine...I’ll do it myself”: Lessons from self-employment grants in a long recession period," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-32, May.
    2. Dominique Redor, 2017. "Do public subsidies have an impact on start-ups survival rates? An assessment for four cohorts of firms set up by previously unemployed entrepreneurs in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 493, pages 23-42.
    3. Elena Gennari & Francesca Lotti, 2013. "Female entrepreneurship and government policy: evaluating the impact of subsidies on firms' survival," Questioni di Economia e Finanza (Occasional Papers) 192, Bank of Italy, Economic Research and International Relations Area.
    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. Tobias Ebert & Thomas Brenner & Udo Brixy, 2019. "New firm survival: the interdependence between regional externalities and innovativeness," Small Business Economics, Springer, vol. 53(1), pages 287-309, June.
    6. Weißenberger, Martin & Caliendo, Marco & Künn, Steffen, 2013. "The Evaluation of Start-Up Subsidies for the Unemployed and the Role of Unobserved Characteristics for Matching Estimators," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79714, Verein für Socialpolitik / German Economic Association.
    7. Egeln, Jürgen & Falk, Ulrich & Heger, Diana & Höwer, Daniel & Metzger, Georg, 2010. "Ursachen für das Scheitern junger Unternehmen in den ersten fünf Jahren ihres Bestehens," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110531.
    8. Begoña Cueto & Matías Mayor & Patricia Suárez, 2017. "Evaluation of the Spanish flat rate for young self-employed workers," Small Business Economics, Springer, vol. 49(4), pages 937-951, December.

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