Imperfect Take-up of COVID-19 Business Support Programs

Tomohito Honda, Kaoru Hosono, Daisuke Miyakawa, Arito Ono and Iichiro Uesugi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Not all firms and individuals targeted by government support measures take up the support even when eligible, i.e., take-up is imperfect. Using data on the use by small and medium-sized enterprises in Japan of various business support measures during the COVID-19 pandemic, we examine whether such imperfect take-up is observed and if so, why. Given that the eligibility criteria for the measures were based on the decline in monthly sales from the previous year, we use a regression discontinuity design. Our results show that take-up of all the measures we examine was imperfect except for one, business continuity grants (BCGs). Our results further show that the imperfect take-up of measures other than BCGs was mitigated when firms that were eligible for those other measures also became eligible for a BCG. Results from sub-sample analyses indicate that these findings can be explained by the transaction costs involved in applying for and using these measures and not by information frictions or a lack of knowledge about the measures.

Pages: 48 pages
Date: 2024-01
New Economics Papers: this item is included in nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:24001

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