Regional Effect Heterogeneity of Start-Up Subsidies for the Unemployed
AbstractRecent microeconometric evaluation studies have shown that start-up subsidies for unemployed individuals are an effective policy tool to improve long-term employment and income prospects of participants, in particular compared to other active labor market programs (e.g. training, job search assistance or job creation schemes). What has not been examined yet are the potentially heterogeneous effects of start-up programs across regional labor markets. Labor demand side restrictions in areas with relatively bad labor market conditions generally increase entries into start-up programs as job offers are limited and starting an own business is an opportunity to leave unemployment. However, the survival of firms in deprived areas is also lower, such that the overall effect remains an empirical question. We use a combination of administrative and survey data and observe participants in two distinct start-up programs in Germany for five years after start-up as well as a control group of unemployed who did not enter these programs. We add information on unemployment rates and GDP per capita at the labor agency district level to distinguish regional labor markets. Using propensity score matching methods we find supportive evidence that the founding process and development of businesses as well as program effectiveness is influenced by prevailing economic conditions at start-up.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7460.
Length: 43 pages
Date of creation: Jun 2013
Date of revision:
Publication status: forthcoming in: Regional Studies, 2014
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Find related papers by JEL classification:
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-30 (All new papers)
- NEP-ENT-2013-06-30 (Entrepreneurship)
- NEP-LAB-2013-06-30 (Labour Economics)
- NEP-URE-2013-06-30 (Urban & Real Estate Economics)
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