The role of business subsidies in job creation of start-ups, gazelles and incumbents

Heli Koski and Mika Pajarinen

Small Business Economics, 2013, vol. 41, issue 1, 195-214

Abstract: This study contributes to the empirical literature concerning the role of business subsidies in job creation. Our empirical analysis, using an extensive firm-level data, suggests that the impact of business subsidies on employment growth differs more between high-growth start-ups and other firms than between start-ups and incumbents. On average, all subsidies relate positively to the contemporary employment growth for both start-ups and incumbents. Furthermore, after subsidy reception, the employment of both start-ups and older incumbents receiving employment or other subsidies grows more than that of non-subsidized firms. However, we find that business subsidies do not provide a significant additional boost to either contemporary or after-subsidy growth for young high-growth companies. There are apparently some other factors that promote growth in young high-growth firms; these factors help foster strong growth in many cases with or without subsidies. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Public subsidies; Enterprise policy; Industrial policy; Technology policy; Employment; Growth; J23; L10; L53; O25; O33; L26 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:41:y:2013:i:1:p:195-214

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DOI: 10.1007/s11187-012-9420-5

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