Small Businesses Appear to Benefit from State or Local Government's Economic Development Assistance

Abstract

This analysis reveals traits of small businesses that received state and local governmental assistance. Among firms owned by nonminorities, the larger small businesses receive aid, and those aided by state or local governments are more likely than unassisted firms to remain in operation, even when one controls for various firm and owner characteristics. These patterns did not typify minority-owned firms. State and local governmental aid flows disproportionately to women-owned businesses and to firm owners who have also received federal governmental assistance. No evidence was found indicating targeting of assistance to specific industry groups.