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Start-up subsidies for the unemployed: Opportunities and limitations

Author

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  • Marco Caliendo

    (University of Potsdam, and IZA, Germany)

Abstract

Turning unemployment into self-employment is a suitable alternative to traditional active labor market policies in many developed countries. Start-up subsidies can assist unemployed workers in setting up their own business. This option can be especially interesting for people whose work is undervalued in paid employment or in situations where job offers are limited because of group-specific labor market constraints or structural changes. Furthermore, start-up subsidies are potentially associated with a “double dividend” if the subsidized businesses prosper, strengthen the economy, and create additional jobs in the future.

Suggested Citation

  • Marco Caliendo, 2016. "Start-up subsidies for the unemployed: Opportunities and limitations," IZA World of Labor, Institute of Labor Economics (IZA), pages 200-200, March.
    • Handle: RePEc:iza:izawol:journl:y:2016:n:200
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    References listed on IDEAS

    as
    1. Marco Caliendo & Alexander Kritikos, 2010. "Start-ups by the unemployed: characteristics, survival and direct employment effects," Small Business Economics, Springer, vol. 35(1), pages 71-92, July.
    2. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    3. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, March.
    4. 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.
    5. Caliendo, Marco & Künn, Steffen, 2011. "Start-up subsidies for the unemployed: Long-term evidence and effect heterogeneity," Journal of Public Economics, Elsevier, vol. 95(3), pages 311-331.
    6. Marco Caliendo & Steffen Künn, 2015. "Getting back into the labor market: the effects of start-up subsidies for unemployed females," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(4), pages 1005-1043, October.
    7. Scott Shane, 2009. "Why encouraging more people to become entrepreneurs is bad public policy," Small Business Economics, Springer, vol. 33(2), pages 141-149, August.
    8. Marco Caliendo & Jens Hogenacker & Steffen Künn & Frank Wießner, 2015. "Subsidized start-ups out of unemployment: a comparison to regular business start-ups," Small Business Economics, Springer, vol. 45(1), pages 165-190, June.
    9. Marco Caliendo & Jens Hogenacker, 2012. "The German labor market after the Great Recession: successful reforms and future challenges," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-24, December.
    10. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, March.
    11. David Audretsch & Max Keilbach, 2004. "Entrepreneurship Capital and Economic Performance," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 949-959.
    12. Michael Fritsch, 2008. "How does new business formation affect regional development? Introduction to the special issue," Small Business Economics, Springer, vol. 30(1), pages 1-14, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Srhoj Stjepan & Zilic Ivan, 2021. "“Fine...I’ll do it myself”: Lessons from self-employment grants in a long recession period," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-32, May.
    2. Ondřej Dvouletý & Stjepan Srhoj & Smaranda Pantea, 2021. "Public SME grants and firm performance in European Union: A systematic review of empirical evidence," Small Business Economics, Springer, vol. 57(1), pages 243-263, June.
    3. Dominique Redor, 2017. "Do public subsidies have an impact on start-ups survival rates? An assessment for four cohorts of firms set up by previously unemployed entrepreneurs in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 493, pages 23-42.
    4. Huňady Ján & Pisár Peter & Hiadlovský Vladimír & Šipikal Miroslav, 2022. "One-way ticket from unemployment to entrepreneurship? Evaluation of allowance for self-employment in least developed regions," Central European Journal of Public Policy, Sciendo, vol. 16(2), pages 1-17, December.
    5. Lutz Bellmann & Marco Caliendo & Stefan Tübbicke, 2018. "The Post‐Reform Effectiveness of the New German Start‐Up Subsidy for the Unemployed," LABOUR, CEIS, vol. 32(3), pages 293-319, September.
    6. Marco Caliendo & Stefan Tübbicke, 2020. "New evidence on long-term effects of start-up subsidies: matching estimates and their robustness," Empirical Economics, Springer, vol. 59(4), pages 1605-1631, October.
    7. Caliendo, Marco & Tübbicke, Stefan, 2021. "Design and effectiveness of start-up subsidies: Evidence from a policy reform in Germany," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 333-340.
    8. Miguel A. Ferreira & Marta C. Lopes & Francisco Queiro & Hugo Reis, 2022. "Which entrepreneurs are financially constrained?," Nova SBE Working Paper Series wp647, Universidade Nova de Lisboa, Nova School of Business and Economics.
    9. Caliendo, Marco & Künn, Steffen & Weissenberger, Martin, 2020. "Catching up or lagging behind? The long-term business and innovation potential of subsidized start-ups out of unemployment," Research Policy, Elsevier, vol. 49(10).
    10. Pierre Möhnen, 2017. "Comment: Effectiveness of public support for R&D and entrepreneurship," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 493, pages 43-48.
    11. Canzian, Giulia & Meroni, Elena Claudia & Santangelo, Giulia, 2023. "Evaluation of a Flemish Active Labour Market Policy in the framework of the European Social Fund. Results and challenges," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    12. Oliver Holtemöller & Stefan Kooths & Claus Michelsen & Torsten Schmidt & Timo Wollmershäuser, 2021. "Gemeinschaftsdiagnose: Pandemie verzögert Aufschwung — Demografie bremst Wachstum [Gemeinschaftsdiagnose: Pandemic Delays Upswing — Demography Slows Growth]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(5), pages 353-357, May.
    13. Marco Mariani & Alessandra Mattei & Lorenzo Storchi & Daniele Vignoli, 2017. "The ambiguous effects of public assistance to youth and female start-ups between job creation and entrepreneurship enhancement," Econometrics Working Papers Archive 2017_04, Universita' degli Studi di Firenze, Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti".

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    More about this item

    Keywords

    start-up subsidies; evaluation; labor market policies; deadweight effects; double dividend;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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