The Ambiguous Effects of Public Assistance to Youth and Female Start-Ups between Job Creation and Entrepreneurship Enhancement

Public support for start-ups often has the dual ambition of fostering self-employment of disadvantaged individuals while nurturing entrepreneurship. In this paper we evaluate a female and youth start-up program recently implemented in Tuscany (Italy) which provides public guarantees and subsidized interest rates to new firms. Under the assumption of strong ignorability of the assignment mechanism, we use a propensity score matching approach to draw inferences on the program’s causal effects on firms’ survival and job creation. The results suggest that public support in this area may have rather ambiguous effects. It helps women and young adults to escape unemployment or inactivity, and may lead to further job creation. Unfortunately, this occurs at the price of committing public resources to entrepreneurial projects that gain little efficiency over time.