Subsidies for Job Creation: Is Small Best?

Subsidies for Job Creation: Is Small Best? Wisdom has it that direct financial assistance to small firms for employment creation may be poor use of resources since these firms have high failure rates. In this paper we identify another feature which works in the other direction, which suggests that small firms will be more responsive to assistance. This is related to these firms relatively poor access to private funds. Recent evidence is reported suggesting that proportionate grant assistance is more effective in small firms, but only in those firms which are new or relatively young. Explanations of this are considered related both to the cost of funds and to other factors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Subsidies for Job Creation: Is Small Best?

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1998 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1007994301635
Publisher site
See Article on Publisher Site

Abstract

Wisdom has it that direct financial assistance to small firms for employment creation may be poor use of resources since these firms have high failure rates. In this paper we identify another feature which works in the other direction, which suggests that small firms will be more responsive to assistance. This is related to these firms relatively poor access to private funds. Recent evidence is reported suggesting that proportionate grant assistance is more effective in small firms, but only in those firms which are new or relatively young. Explanations of this are considered related both to the cost of funds and to other factors.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 6, 2004

References

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