Do public subsidies have an impact on start-ups survival rates? An assessment for four cohorts of firms set up by previously unemployed entrepreneurs in France

Abstract

[eng] Business start-up assistance has been adopted as a tool for implementing proactive employment policies across most OECD nations. In France, the ACCRE start-up support programme for unemployed people creating or taking over firms has expanded strongly since its introduction in 1979. The number of people joining the ACCRE programme exceeded 80,000 in 2006 and peaked at 220,000 in 2010. We have studied the effect of the ACCRE system on the survival (measured after five years) of four cohorts of firms started by unemployed entrepreneurs in 1994, 1998, 2002 and 2006, based on survey data in INSEE's “new firms information system”, SINE. According to descriptive statistics, the survival outlook for firms created by ACCRE beneficiaries is better than that of firms created by non-recipients. However, using simultaneous equations to model ACCRE approval and firm survival revealed evidence of ACCRE recipient selection based on the administrative approval process, as well as self-selection by entrepreneurs. Adjusted accordingly, ACCRE appears to have no effect on the survival of supported firms for most categories of unemployed people.