Information Frictions and Firm Take up of Government Support: A Randomised Controlled Experiment

Custódio, Cláudia, Diogo Mendes and Christopher Hansman
Authors registered in the RePEc Author Service: Claudia Custodio

No 16216, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies whether informational frictions prevent firms from accessing government support measures using an encouragement based randomized controlled trial. We focus on two COVID-19 relief programs for firms in Portugal. These programs provide (i) wage support for workers who are kept on payroll and (ii) lines of credit backed by government guarantees. We randomly assign firms to a treatment providing either simplified information regarding the program or a combination of information and step-by-step application support. We find a significant treatment effect of simple information provision to firms on take up for the wage support program, but not for lines of credit. Our results constitute direct evidence that information frictions can act as a meaningful barrier to comprehensive distribution of firm-level support measures.

Keywords: Take-up of government programs; Covid19; Smes; Information (search for similar items in EconPapers)
JEL-codes: G38 G41 (search for similar items in EconPapers)
Date: 2021-06
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