Do Micro-Enterprises Ask for Local Support Measures? Evidence After the COVID-19 Pandemic

Government subsidies have been one of the main policy instruments used to deal with the economic effects of the COVID-19 pandemic. This study investigated the impact of spatial dependence on the take-up rate of local government subsidies in 2020. It focused on a specific sub-population of firms hit particularly hard by the pandemic: micro-enterprises. Since microdata on this type of firm are rare, we focused on a representative survey of local firms in Trentino, a province in the north of Italy. The sample is linked with administrative balance sheet data up to 2019, providing a wide range of covariates to control for the characteristics of eligible enterprises that did and did not apply for COVID-19 aid. The methodology focused on using a spatial probit model that properly provides local direct, indirect and total marginal effects to investigate the spatial heterogeneity of revenues with respect to the probability of receiving a provincial subsidy.