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

Author

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  • Sourafel Girma
  • Holger Görg
  • Aoife Hanley
  • Eric Strobl

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.
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  • Sourafel Girma & Holger Görg & Aoife Hanley & Eric Strobl, 2010. "The effect of grant receipt on start-up size: Evidence from plant level data," Journal of International Entrepreneurship, Springer, vol. 8(4), pages 371-391, December.
    • Handle: RePEc:kap:jinten:v:8:y:2010:i:4:p:371-391
    DOI: 10.1007/s10843-010-0061-y
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    2. Giuseppina Testa & Katarzyna Szkuta, 2018. "Improving access to finance for young innovative enterprises with growth potential: evidence of impact on firms' output - Part 2. R&D grant schemes: lessons learned from evaluations," JRC Research Reports JRC109879, Joint Research Centre.

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    More about this item

    Keywords

    Grants; Subsidies; Entry; Start-up size;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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