How Big is Small? The Economic Effects of Access to Small Business Government Support

J. David Brown, Matthew Denes, Ran Duchin and John Hackney

No 35703, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the effects of vast increases in U.S. small business program eligibility standards, which expanded larger firms' access to support for small businesses. Exploiting quasi-random variation in the timing of these expansions and using administrative Census data, we show that revenues decline for the smallest firms, particularly those that are younger, more productive, and financially constrained. Government procurement contracts also are reallocated to larger firms. Consequently, firm exits increase, wages decline, and patenting falls. These findings highlight the economic consequences of expanding eligibility: by crowding out the smallest firms, resources shift away from high-potential firms, reducing dynamism and innovation.

JEL-codes: E24 G38 H25 H57 L25 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-bec, nep-mac and nep-sbm
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