Start-up subsidies for the unemployed: Long-term evidence and effect heterogeneity

Arbeitspapier

Turning unemployment into self-employment has become an increasingly important part of active labor market policies (ALMP) in many OECD countries. Germany is a good example where the spending on start-up subsidies for the unemployed accounted for nearly 17% of the total spending on ALMP in 2004. In contrast to other programs-like vocational training, job creation schemes, or wage subsidies-the empirical evidence on the effectiveness of such schemes is still scarce; especially regarding long-term effects and effect heterogeneity. This paper aims to close this gap. We use administrative and survey data from a large sample of participants in two distinct start-up programs and a control group of unemployed individuals. We find that over 80% of participants are integrated in the labor market and have relatively high labor income five years after start-up. Additionally, participants are much more satisfied with their current occupational situation compared to previous jobs. Based on conditional propensity score matching methods we estimate the long-term effects of the programs against non-participation. Our results show that both programs are effective with respect to income and employment outcomes in the long-run. Moreover, we consider effect heterogeneity with respect to several dimensions and show that start-up subsidies for the unemployed tend to be most effective for disadvantaged groups in the labor market.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 985

Classification and Topics

• Classification: Wirtschaft ; Mobility, Unemployment, and Vacancies: Public Policy ; Semiparametric and Nonparametric Methods: General ; Project Evaluation; Social Discount Rate
• Subject: Start-up subsidies ; self-employment ; evaluation ; long-term effects ; effect heterogeneity ; Selbstständige ; Arbeitslosigkeit ; Unternehmensgründung ; Subvention ; Arbeitsmarktpolitik ; Wirkungsanalyse ; Unternehmensentwicklung ; Beschäftigungseffekt ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Caliendo, Marco ; Künn, Steffen
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/36723
• Last update: 10.03.2025, 11:46 AM CET