Abstract
Governments attempt to stimulate entrepreneurship and innovation in various ways and with different results. In 2015 the Romanian government began to subsidize the creation of start-ups, following a general policy of the European Union. We evaluate the effects of the Romania Start-up Program, which offered subsidies for hundreds of entrepreneurs in a large variety of economic sectors. We statistically compare subsidized and unsubsidized start-ups, by calculating the Kaplan-Meier estimators of survival rates in both groups over a 5-year period. We show that subsidized start-ups have a significantly lower survival rate than non-subsidized start-ups after 4 to 5 years. Moreover, the level of employment in subsidized start-ups decreased drastically compared to their non-subsidized counterparts. Examining the survival rates of subsidized start-ups created with/without additional private investment, we find that start-ups with “skin in the game” have a higher survival rate, although we cannot draw statistically significant conclusions.