IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v7y2015i2p125-61.html
   My bibliography  Save this article

Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training

Author

Listed:
  • Robert W. Fairlie
  • Dean Karlan
  • Jonathan Zinman

Abstract

Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees. (JEL I26, J24, J68, L25, L26, M13)

Suggested Citation

  • Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-161, May.
    • Handle: RePEc:aea:aejpol:v:7:y:2015:i:2:p:125-61
    Note: DOI: 10.1257/pol.20120337
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.20120337
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/pol/data/0702/2012-0337_data.zip
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/pol/ds/0702/2012-0337_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert W. Fairlie, 2013. "Entrepreneurship, Economic Conditions, and the Great Recession," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 207-231, June.
    2. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    3. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    4. Aderonke Osikominu, 2013. "Quick Job Entry or Long-Term Human Capital Development? The Dynamic Effects of Alternative Training Schemes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 313-342.
    5. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    6. Jeanne Bellotti & Sheena McConnell & Jacob Benus, "undated". "Growing America Through Entrepreneurship," Mathematica Policy Research Reports d3bbbcef77fe49cb988c23d84, Mathematica Policy Research.
    7. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
    8. Alejandro Drexler & Greg Fischer & Antoinette Schoar, 2014. "Keeping It Simple: Financial Literacy and Rules of Thumb," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 1-31, April.
    9. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
    10. Karlan, Dean S. & Knight, Ryan & Udry, Christopher R., 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Center Discussion Papers 133405, Yale University, Economic Growth Center.
    11. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
    12. Robert W. Fairlie & Harry A. Krashinsky, 2012. "Liquidity Constraints, Household Wealth, And Entrepreneurship Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(2), pages 279-306, June.
    13. Kawaguchi, Daiji, 2008. "Self-Employment Rents : Evidence from Job Satisfaction Scores," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 49(1), pages 35-45, June.
    14. David B. Audretsch & Oliver Falck & Stephan Heblich & Adam Lederer (ed.), 2011. "Handbook of Research on Innovation and Entrepreneurship," Books, Edward Elgar Publishing, number 13275.
    15. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    16. Hans J. Baumgartner & Marco Caliendo, 2008. "Turning Unemployment into Self‐Employment: Effectiveness of Two Start‐Up Programmes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(3), pages 347-373, June.
    17. repec:mpr:mprres:5464 is not listed on IDEAS
    18. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, March.
    19. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    20. Almeida, Rita K. & Galasso, Emanuela, 2007. "Jump-Starting Self-Employment? Evidence among Welfare Participants in Argentina," IZA Discussion Papers 2902, Institute of Labor Economics (IZA).
    21. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank, vol. 29(1), pages 48-82.
    22. Michaelides, Marios & Benus, Jacob, 2012. "Are self-employment training programs effective? Evidence from Project GATE," Labour Economics, Elsevier, vol. 19(5), pages 695-705.
    23. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
    24. Rosendahl Huber, Laura & Sloof, Randolph & van Praag, Mirjam C., 2012. "The Effect of Early Entrepreneurship Education: Evidence from a Randomized Field Experiment," IZA Discussion Papers 6512, Institute of Labor Economics (IZA).
    25. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January.
    26. repec:mpr:mprres:6190 is not listed on IDEAS
    27. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    28. David S. Lee, 2002. "Trimming for Bounds on Treatment Effects with Missing Outcomes," NBER Technical Working Papers 0277, National Bureau of Economic Research, Inc.
    29. David S. Lee, 2009. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 1071-1102.
    30. Oosterbeek, Hessel & van Praag, Mirjam & Ijsselstein, Auke, 2010. "The impact of entrepreneurship education on entrepreneurship skills and motivation," European Economic Review, Elsevier, vol. 54(3), pages 442-454, April.
    31. Almeida, Rita K. & Galasso, Emanuela, 2010. "Jump-starting Self-employment? Evidence for Welfare Participants in Argentina," World Development, Elsevier, vol. 38(5), pages 742-755, May.
    32. Núria Rodríguez‐Planas, 2010. "Channels through which Public Employment Services and Small Business Assistance Programmes Work," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(4), pages 458-485, August.
    33. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, March.
    34. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 142-169, October.
    35. Carrasco, Raquel, 1999. "Transitions to and from Self-employment in Spain: An Empirical Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 315-341, August.
    36. Erica Field & Seema Jayachandran & Rohini Pande, 2010. "Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India," American Economic Review, American Economic Association, vol. 100(2), pages 125-129, May.
    37. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ross Levine & Yona Rubinstein, 2018. "Selection into Entrepreneurship and Self-Employment," NBER Working Papers 25350, National Bureau of Economic Research, Inc.
    2. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    3. Maitra, Pushkar & Mani, Subha, 2017. "Learning and earning: Evidence from a randomized evaluation in India," Labour Economics, Elsevier, vol. 45(C), pages 116-130.
    4. Robert W. Fairlie & Javier Miranda, 2017. "Taking the Leap: The Determinants of Entrepreneurs Hiring Their First Employee," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 3-34, February.
    5. Gabriela Calderon & Jesse M. Cunha & Giacomo De Giorgi, 2020. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 68(2), pages 507-540.
    6. Robert W. Fairlie & Harry A. Krashinsky, 2012. "Liquidity Constraints, Household Wealth, And Entrepreneurship Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(2), pages 279-306, June.
    7. Eduardo Nakasone & Maximo Torero, 2014. "Soap Operas for Female Micro Entrepreneur Training," IDB Publications (Working Papers) 87916, Inter-American Development Bank.
    8. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    9. Robert W. Fairlie, 2013. "Entrepreneurship, Economic Conditions, and the Great Recession," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 207-231, June.
    10. Robert W. Fairlie, 2013. "Minority and immigrant entrepreneurs: access to financial capital," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 8, pages 153-175, Edward Elgar Publishing.
    11. Bandiera, Oriana. & Buehren, Niklas. & Burgess, Robin & Goldstein, Markus P., & Gulesci, Selim. & Rasul, Imran. & Sulaiman, Munshi., 2015. "Women’s economic empowerment in action : evidence from a randomized control trial in Africa," ILO Working Papers 994874053402676, International Labour Organization.
    12. Premand, Patrick & Brodmann, Stefanie & Almeida, Rita & Grun, Rebekka & Barouni, Mahdi, 2016. "Entrepreneurship Education and Entry into Self-Employment Among University Graduates," World Development, Elsevier, vol. 77(C), pages 311-327.
    13. Robert W. Fairlie & Frank M. Fossen, 2018. "Opportunity versus Necessity Entrepreneurship: Two Components of Business Creation," SOEPpapers on Multidisciplinary Panel Data Research 959, DIW Berlin, The German Socio-Economic Panel (SOEP).
    14. Nakasone, Eduardo & Torero, Maximo, 2014. "Soap Operas for for Female Micro Entrepreneur Training," MPRA Paper 61302, University Library of Munich, Germany.
    15. Michaelides, Marios & Benus, Jacob, 2012. "Are self-employment training programs effective? Evidence from Project GATE," Labour Economics, Elsevier, vol. 19(5), pages 695-705.
    16. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    17. Magnus Lofstrom, 2013. "Does self-employment increase the economic well-being of low-skilled workers?," Small Business Economics, Springer, vol. 40(4), pages 933-952, May.
    18. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
    19. Lucia Dalla Pellegrina & Giorgio Di Maio & Paolo Landoni & Emanuele Rusinà, 2021. "Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1049-1085, October.
    20. Teresa Molina Millán & Karen Macours, 2017. "Attrition in randomized control trials: Using tracking information to correct bias," FEUNL Working Paper Series novaf:wp1702, Universidade Nova de Lisboa, Faculdade de Economia.

    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training (American Economic Journal: Economic Policy 2015) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:7:y:2015:i:2:p:125-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.