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Publicação
Public Funding and Non-Frontier Entrepreneurship
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Orientador(es)
Resumo(s)
While high-tech and VC-backed firms drive innovation, most employment originates from non-frontier incorporated entrepreneurs. Can public funding alleviate liquidity constraints for these entrepreneurs? We study a Portuguese program that allows unemploymentinsurancerecipientstocollecttheirbenefitsupfronttostartabusiness,providedthey either forgo other work for three years or repay the amount received. Exploiting age-based discontinuities in benefit duration, we estimate an elasticity of incorporated entry with respecttofundingof0.65,morethanthreetimesthatforunincorporatedentry. Theresponse is strongest among higher-wage workers, women, and during periods of financial stress. Consistent with a liquidity channel, program funding also increases firm size, capital intensity, productivity, and access to credit. Each e10,000 of funding generates 1.5 job-years by age 1 and 5.3 job-years by age 8. The evidence suggests that the repayment obligation for re-entering employment does not impose lasting financial hardship.
Descrição
Palavras-chave
Entrepreneurship Unemployment insurance Financial constraints Public funding
Contexto Educativo
Citação
Ferreira, Miguel, Lopes, Marta C., Queiró, Francisco, Reis, Hugo. Public Funding and Non-Frontier Entrepreneurship?. (January 2021) Nova SBE Working Paper Series No. 647