System dynamics and geometric compromise programming: assessing the impact of entrepreneurship wage subsidies on macroeconomic objectives

Abstract Entrepreneurship plays a crucial role in economic development, and wage subsidies for new firms serve as a key instrument to promote it. This study integrates system dynamics with geometric compromise programming to assess the impact of entrepreneurship wage subsidies on four macroeconomic objectives: maximizing the number of new firms, employment, and tax revenue, while minimizing subsidy costs. It is the first study to combine these methodologies, enabling an analysis of the complex interactions between the labor market, the real sector, and government interventions. Key findings reveal that decision variables, such as subsidy parameters, impact utility objectives with a one‐year lag. Increasing the number of benefit variables extends the optimal subsidy period while reducing the subsidy limit. Most study cases show similar effects for workers and tax revenue. The model developed in this study provides valuable decision support for policymakers, offering insights into the macro‐level dynamics of a national entrepreneurial ecosystem.