Do subsidized new firms survive longer? Evidence from a counterfactual approach

Do subsidized new firms survive longer? Evidence from a counterfactual approach. Regional Studies. This study provides a statistically robust evaluation of the impact of capital subsidies on the survival of start-ups in Italy. The analysis considers the subsidies provided by the main Italian regional policy, Law 488/1992, during 1996–2009. By exploiting an unusual characteristic of the L. 488 selection process, a quasi-experimental design with high internal validity – the regression discontinuity design – is applied for the first time to the survival analysis. The results show a lower default risk in subsidized start-ups. These findings contradict the view that start-ups receiving L. 488 assistance simply used the grant funding to delay exit.