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Business Start-ups by the Unemployed - an Econometric Analysis Based on Firm Data

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  • Pfeiffer, Friedhelm
  • Reize, Frank

Abstract

This study investigates firm survival and employment growth of start-ups by unemployed people in East and West Germany as promoted by the Work Support Act (so called bridging allowances). In 1994, the services provided were improved considerably, which led to a sharp increase in the number of start-ups by the unemployed. The empirical analysis is based on a sample of newly founded firms from the ZEW Firm Start-up Panel. The sample contains firms which were founded between 1993 and 1995 and could be observed at least one year after their foundation in 4 regions of East and 11 regions of West Germany. In the econometric analysis, self-selection effects are taken into account by using simultaneous models of start-up promotion and firm development. While firm survival seems to be negatively affected by foundation from unemployment, especially in the East German regions, an influence on employment growth is not evident. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 98-38.

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Date of creation: 1998
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Handle: RePEc:zbw:zewdip:9838

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  1. Christopher J. O'Leary, 1999. "Promoting Self Employment Among the Unemployed in Hungary and Poland," Upjohn Working Papers and Journal Articles 99-55, W.E. Upjohn Institute for Employment Research.
  2. Harhoff, Dietmar & Stahl, Konrad & Woywode, Michael, 1998. "Legal Form, Growth and Exit of West German Firms--Empirical Results for Manufacturing, Construction, Trade and Service Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 453-88, December.
  3. Greene, W.H., 1996. "Marginal Effects in the Bivariate Probit Model," Working Papers 96-11, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc.
  5. Schultz, Theodore W, 1980. " Investment in Entrepreneurial Ability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 82(4), pages 437-48.
  6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  7. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  8. Daniel Friedlander & David H. Greenberg & Philip K. Robins, 1997. "Evaluating Government Training Programs for the Economically Disadvantaged," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1809-1855, December.
  9. Friedhelm PFEIFFER & Winfried POHLMEIER, 1992. "Income, Uncertainty and the Probability of Self-Employment," Discussion Papers (REL - Recherches Economiques de Louvain) 1992032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  10. William Greene, 1998. "Gender Economics Courses in Liberal Arts Colleges: Comment," Working Papers 98-06, New York University, Leonard N. Stern School of Business, Department of Economics.
  11. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
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