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How Big is Small? The Economic Effects of Access to Small Business Subsidies

June 2024

Working Paper Number:

CES-24-28

Abstract

Industry size standards that determine eligibility for small business subsidies have vastly increased over the past decade. We exploit quasi-random variation in the implementation of size standard increases to study the effects on small firms, subsidy allocation, and industry outcomes using Census Bureau microdata. Following size standard increases, revenues decline for an industry's smallest firms, and they are less likely to survive. We link these effects to a reallocation of government procurement contracts from smaller to larger firms. Consequently, industries become more concentrated and growth declines. These findings highlight the broad economic effects of changing eligibility for small business subsidies.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
market, macroeconomic, growth, firms size, small firms, expenditure, revenue, subsidy, contract

Tags Tags are automatically generated using a pretrained language model from spaCy, which excels at several tasks, including entity tagging.

The model is able to label words and phrases by part-of-speech, including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are identified to contain references to specific institutions, datasets, and other organizations.
:
Internal Revenue Service, Small Business Administration, County Business Patterns, Census Bureau Longitudinal Business Database, Longitudinal Business Database, Boston College, Journal of Economic Literature, Economic Census, North American Industry Classification System

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