Impact evaluation of grants for young firms during the recession – GRANT IMPACT

Commissioned by: The Institute of Economics, Zagreb (Tvoj Grant@EIZ)
Project manager: Bruno Škrinjarić
Collaborators: Stjepan Srhoj, Sonja Radas
Project duration: February 13, 2018 -  September 30, 2018

The main objective of this project was to perform the evaluation of grants given to young firms in Croatia during the recession period 2008 - 2013. Young firms were defined as those being less or equal to 5 years on the market since their incorporation. In particular, the outcome variable of greatest interest was the years of survival on the market after receiving a grant which was accompanied by other firm performance outcome variables such as increase in turnover, employment, total factor productivity and labour productivity.
Project activities included:

  1. Merging FINA and grant scheme datasets
  2. Choosing appropriate methodology for evaluation of grant impact
  3. Estimating the effect of grant on firm survival rate and firm performance. 

Methodology for this project consisted of five parts. In the first part we merged two big datasets: i) FINA dataset with financial data on population of Croatian enterprises for period 2003-2016; and ii) data on grants given to firms in 2008-2013 period from Ministry of Entrepreneurship and Crafts of the Republic of Croatia. The second part of methodology involved data cleaning process which left us with only relevant observations for our project. The following part focused on choosing the appropriate methodology for the evaluation of grant impact.  The fourth part of methodology involved estimating the probability of obtaining a grant (the propensity score), using a probit model. After estimating propensity score, in the fifth methodological step we defined outcome variables of interest and used different matching techniques for estimating the average treatment effect on the treated.