The ambiguous effects of public assistance to youth and female start-ups between job creation and entrepreneurship enhancement

Public support to 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 inference on causal effects of the program on firms' survival and job creation. Results suggest that public support in this area may have rather ambiguous effects. It helps women and young adults escape unemployment or inactivity, and may lead to further job creation. Unfortunately, all this occurs at the price of committing public resources towards entrepreneurial projects that hardly gain efficiency over time.