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

  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 will consist of five parts. In the first part we merge 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. Second part of methodology involves data cleaning process which leaves us with only relevant observations for our project. The following part focuses on choosing the appropriate methodology for the evaluation of grant impact.  The fourth part of methodology involves estimating a probability of obtaining a grant (the propensity score), using a probit model. After estimating propensity score, in fifth methodological step we define outcome variables of interest and use different matching techniques for estimating the average treatment effect on the treated.