Abstract
During the COVID-19 pandemic, Greece implemented a wide range of state aid measures funded by the European Union and in line with EU state aid rules. Announced shortly before the first nationwide lockdown in March 2020, these measures aimed to mitigate the economic shock by supporting entrepreneurship and employment. The aid took multiple forms: (i) refundable cash advances to affected companies; (ii) thirteen region-specific programs; (iii) eight sectoral subsidy schemes targeting retail, tourism, catering, entertainment, legal services, construction, fisheries, and other sectors; and (iv) six additional programs including interest subsidies on loans, working capital support, loan guarantees, SME financing, start-up assistance, and human resource development. Several programs were implemented in multiple cycles.
To assess their impact, a stratified survey was conducted in Spring - Summer 2023 on a weighted sample of 3,541 legal units - covering all 13 regions of Greece and 18 of 19 economic sectors - based on the pre-pandemic business population. The sample included beneficiaries, unsuccessful applicants, partial beneficiaries, and non-applicants. Respondents provided Likert-scale evaluations (1-5) of the aid's effect on five dimensions: (I) job preservation, (II) job creation, (III) adjustment to pandemic conditions, (IV) business continuity, and (V) resilience for the post-pandemic era. Multiple applications by the same unit were captured, yielding over 6,150 usable observations for the econometric analysis.
A multivariate ordered probit model was applied, accounting for application status, approval outcome, type of aid, complementary aid received, and enterprise and respondent characteristics. Results indicate heterogeneous effects across aid types and objectives. Positive and statistically significant impacts included:
- Job preservation from regional programs in Central Macedonia and the South Aegean, and from the fisheries \& sea program.
- Job creation from fisheries \& sea measures and working capital loans to construction firms.
- Improved adjustment to pandemic conditions from subsidies to self-employed lawyers.
- Enhanced continuity from programs in Attica and West Macedonia, fisheries \& sea measures, interest subsidies on loans, and tourism liquidity subsidies.
- Greater resilience from subsidies to self-employed lawyers.
- Start-up support positively influencing all five aspects.
Negative effects were also observed: subsidies to retail businesses reduced job preservation; Central Greece's regional program lowered resilience; and refundable cash advances reduced both job preservation and resilience. Perceived impacts of unapproved applications suggest that some measures, if granted, might have produced positive results similar to approved ones. Respondent dispositions towards state aid varied systematically by sector, enterprise type, and region, with both positive and negative patterns emerging.
Overall, the findings reveal that state aid during the pandemic produced measurable but uneven benefits, with certain programs achieving targeted objectives more effectively than others. These results provide evidence-based guidance for the design of future crisis-response policies in Greece and comparable economies.
JEL Classification: C25, G38, H81, H84, M21