The role of business subsidies in job creation of start-ups, gazelles and incumbents

This study contributes to the empirical literature concerning the role of business subsidies in job creation. Our empirical analysis, using an extensive firm-level data, suggests that the impact of business subsidies on employment growth differs more between high-growth start-ups and other firms tha...

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Bibliographic Details
Published in:Small business economics 2013-06, Vol.41 (1), p.195-214
Main Authors: Koski, Heli, Pajarinen, Mika
Format: Article
Language:English
Subjects:
Business and Management
Business expansion
Business structures
Economic growth
Employees
Employment
Employment creation
Employment level
Entrepreneurship
Funding
Government subsidies
Incumbents
Industrial Organization
Industrial policy
Innovations
Investment subsidies
Job creation
Labor economics
Management
Microeconomics
Significance level
Standard error
Start up firms
Startups
Studies
Subsidies
Technology
Technology policy
Venture capital
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Summary:This study contributes to the empirical literature concerning the role of business subsidies in job creation. Our empirical analysis, using an extensive firm-level data, suggests that the impact of business subsidies on employment growth differs more between high-growth start-ups and other firms than between start-ups and incumbents. On average, all subsidies relate positively to the contemporary employment growth for both start-ups and incumbents. Furthermore, after subsidy reception, the employment of both start-ups and older incumbents receiving employment or other subsidies grows more than that of nonsubsidized firms. However, we find that business subsidies do not provide a significant additional boost to either contemporary or after-subsidy growth for young high-growth companies. There are apparently some other factors that promote growth in young highgrowth firms; these factors help foster strong growth in many cases with or without subsidies.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-012-9420-5