German financial state aid during Covid-19 pandemic: Higher impact among digitalized self-employed

Irene Bertschek, Joern Block, Alexander S. Kritikos and Caroline Stiel

Entrepreneurship & Regional Development, 2024, vol. 36, issue 1-2, 76-97

Abstract: In response to strong revenue and income losses facing a large share of self-employed individuals during the COVID-19 pandemic, the German federal government introduced a €50bn emergency-aid program. Based on real-time online-survey data comprising more than 20,000 observations, we analyze the impact of this program on the confidence to survive the crisis. We investigate how the digitalization level of self-employed individuals influences the program’s effectiveness. Employing propensity score matching, we find that the emergency-aid program had only moderately positive effects on the confidence of self-employed to survive the crisis. However, self-employed whose businesses were highly digitalized, benefitted much more from the state aid than those whose businesses were less digitalized. This only holds true for those self-employed, who started the digitalization processes already before the crisis. Taking a regional perspective, we find suggestive evidence that the quality of the regional broadband infrastructure matters in the sense that it increases the effectiveness of the emergency-aid program. Our findings show the interplay between governmental support programs, the digitalization levels of entrepreneurs, and the regional digital infrastructure. The study helps public policy to improve the impact of crisis-related policy instruments, ultimately increasing the resilience of small firms in times of crises.

Date: 2024
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Working Paper: German Financial State Aid during COVID-19 Pandemic: Higher Impact among Digitalized Self-Employed (2022)
Working Paper: German Financial State Aid during COVID-19 Pandemic: Higher Impact among Digitalized Self-Employed (2022)
Working Paper: German financial state aid during COVID-19 pandemic: Higher impact among digitalized self-employed (2022)
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DOI: 10.1080/08985626.2023.2196267

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