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

Heli Koski*, Mika Pajarinen

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

30 Citations (Scopus)

Abstract

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 non-subsidized 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 high-growth firms; these factors help foster strong growth in many cases with or without subsidies.

Original languageEnglish
Pages (from-to)195-214
Number of pages20
JournalSmall Business Economics
Volume41
Issue number1
DOIs
Publication statusPublished - Jun 2013
MoE publication typeA1 Journal article-refereed

Keywords

  • Employment
  • Enterprise policy
  • Growth
  • Industrial policy
  • J23
  • L10
  • L26
  • L53
  • O25
  • O33
  • Public subsidies
  • Technology policy

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