Working Paper: CEPR ID: DP16216
Authors: Claudia Custodio; Diogo Mendes; Christopher Hansman
Abstract: This paper studies whether informational frictions prevent firms from accessing government support measures using an encouragement based randomized controlled trial. We focus on two COVID-19 relief programs for firms in Portugal. These programs provide (i) wage support for workers who are kept on payroll and (ii) lines of credit backed by government guarantees. We randomly assign firms to a treatment providing either simplified information regarding the program or a combination of information and step-by-step application support. We find a significant treatment effect of simple information provision to firms on take up for the wage support program, but not for lines of credit. Our results constitute direct evidence that information frictions can act as a meaningful barrier to comprehensive distribution of firm-level support measures.
Keywords: takeup of government programs; covid19; smes; information
JEL Codes: G38; G41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| simplified information provision (L86) | likelihood of firms applying for layoff support program (J65) |
| information frictions (D89) | likelihood of firms applying for layoff support program (J65) |
| simplified information provision (L86) | likelihood of firms applying for credit line guarantee program (H81) |