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The effect of grant receipt on start-up size: Evidence from plant level data

Sourafel Girma (), Holger Görg, Aoife Hanley and Eric Strobl ()

No 1607, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: In this paper we use plant level data on the start-up size of new plant entries and detailed information on the grants received by such plants in order to investigate whether grant receipt encourages plants to start-up with more employment than without support. The data relate to manufacturing plants in the Republic of Ireland, where industrial policy has a long history of using discretionary grants to encourage employment growth. We use a matching procedure to deal with the issue of selectivity into grant receipt, and a quantile regression estimator to allow for different effects of grants on plants depending on their position in the start-up size distribution. Our results provide evidence that grants do indeed encourage plants to start-up larger. We also find that this effect is generally higher for foreign than for domestic plants, and that it differs for plants at different quantiles of the start-up size distribution.

Keywords: Grants; subsidies; entry; start-up size (search for similar items in EconPapers)
JEL-codes: H2 L2 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1607

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