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

Ana Martins (), João Pereira dos Santos () and Fernando Pozzobon ()
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Ana Martins: Technical University of Lisbon
João Pereira dos Santos: ISEG
Fernando Pozzobon: Universidade Técnica de Lisboa

No 18136, IZA Discussion Papers from Institute of Labor Economics (IZA)

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

Keywords: times of crisis; small private firms; grants (search for similar items in EconPapers)
JEL-codes: D22 H25 H32 L20 (search for similar items in EconPapers)
Date: 2025-09
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