IDEAS home Printed from https://ideas.repec.org/a/bla/obuest/v70y2008i3p347-373.html
   My bibliography  Save this article

Turning Unemployment into Self‐Employment: Effectiveness of Two Start‐Up Programmes

Author

Listed:
  • Hans J. Baumgartner
  • Marco Caliendo

Abstract

Turning unemployment into self‐employment has become a major focus of German active labour market policy (ALMP) in recent years. If effective, this would not only reduce Germany's persistently high unemployment rate, but also increase its notoriously low self‐employment rate. Empirical evidence on the effectiveness of such programmes is scarce. We evaluate the effectiveness of two start‐up programmes for the unemployed, where we include the probability of being employed, the probability of being unemployed and personal income as outcome variables. Our results show that at the end of the observation period, both programmes are effective. The considerable positive effects present a stark contrast to findings from evaluations of other German ALMP programmes in recent years. Hence, ALMP programmes aimed at moving the unemployed into self‐employment may prove to be among the most effective, both in Germany and elsewhere.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:obuest:v:70:y:2008:i:3:p:347-373
    DOI: 10.1111/j.1468-0084.2008.00505.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-0084.2008.00505.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1468-0084.2008.00505.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fredriksson, Peter & Johansson, Per, 2004. "Dynamic Treatment Assignment – The Consequences for Evaluations Using Observational Data," IZA Discussion Papers 1062, Institute of Labor Economics (IZA).
    2. Marco Caliendo, 2009. "Start-up subsidies in East Germany: finally, a policy that works?," International Journal of Manpower, Emerald Group Publishing, vol. 30(7), pages 625-647, November.
    3. Lechner, Michael & Wunsch, Conny, 2006. "Active Labour Market Policy in East Germany: Waiting for the Economy to Take Off," CEPR Discussion Papers 5924, C.E.P.R. Discussion Papers.
    4. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    5. Pfeiffer, Friedhelm & Reize, Frank, 2000. "Business start-ups by the unemployed -- an econometric analysis based on firm data," Labour Economics, Elsevier, vol. 7(5), pages 629-663, September.
    6. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
    7. Nigel Meager & Peter Bates & Marc Cowling, 2003. "An Evaluation of Business Start-Up Support for Young People," National Institute Economic Review, National Institute of Economic and Social Research, vol. 186(1), pages 59-72, October.
    8. Alberto Abadie & Guido W. Imbens, 2008. "On the Failure of the Bootstrap for Matching Estimators," Econometrica, Econometric Society, vol. 76(6), pages 1537-1557, November.
    9. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers W03/20, Institute for Fiscal Studies.
    10. Lechner, Michael, 1999. "Earnings and Employment Effects of Continuous Off-the-Job Training in East Germany after Unification," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 74-90, January.
    11. Lechner Michael & Miquel Ruth & Wunsch Conny, 2007. "The Curse and Blessing of Training the Unemployed in a Changing Economy: The Case of East Germany After Unification," German Economic Review, De Gruyter, vol. 8(4), pages 468-509, December.
    12. Marco Caliendo & Viktor Steiner, 2005. "Aktive Arbeitsmarktpolitik in Deutschland: Bestandsaufnahme und Bewertung der mikroökonomischen Evaluationsergebnisse," Discussion Papers of DIW Berlin 515, DIW Berlin, German Institute for Economic Research.
    13. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    14. Caliendo, Marco & Hujer, Reinhard & Thomsen, Stephan L., 2005. "The Employment Effects of Job Creation Schemes in Germany: A Microeconometric Evaluation," IZA Discussion Papers 1512, Institute of Labor Economics (IZA).
    15. Y Georgellis & J G Sessions & N Tsitsianis, 2005. "Self-Employment Longitudinal Dynamics: A Review of the Literature," Economic Issues Journal Articles, Economic Issues, vol. 10(2), pages 51-84, September.
    16. Begona Cueto & Javier Mato, 2006. "An analysis of self-employment subsidies with duration models," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 23-32.
    17. Jose C. Galdo & Jeffrey Smith & Dan Black, 2008. "Bandwidth Selection and the Estimation of Treatment Effects with Unbalanced Data," Annals of Economics and Statistics, GENES, issue 91-92, pages 189-216.
    18. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 01 Feb 2018.
    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. Baumgartner, Hans J. & Caliendo, Marco, 2007. "Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes," IZA Discussion Papers 2660, Institute of Labor Economics (IZA).
    2. Marco Caliendo, 2009. "Start-up subsidies in East Germany: finally, a policy that works?," International Journal of Manpower, Emerald Group Publishing, vol. 30(7), pages 625-647, November.
    3. 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.
    4. 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.
    5. Caliendo Marco & Hujer Reinhard & Thomsen Stephan L., 2006. "Sectoral Heterogeneity in the Employment Effects of Job Creation Schemes in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(2), pages 139-179, April.
    6. Rodríguez-Planas, Núria, 2007. "What Works Best for Getting the Unemployed Back to Work: Employment Services or Small-Business Assistance Programmes? Evidence from Romania," IZA Discussion Papers 3051, Institute of Labor Economics (IZA).
    7. Ulf Rinne & Marc Schneider & Arne Uhlendorff, 2011. "Do the skilled and prime-aged unemployed benefit more from training? Effect heterogeneity of public training programmes in Germany," Applied Economics, Taylor & Francis Journals, vol. 43(25), pages 3465-3494.
    8. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    9. Calavrezo, Oana & Duhautois, Richard & Walkowiak, Emmanuelle, 2010. "Short-Time Compensation and Establishment Exit: An Empirical Analysis with French Data," IZA Discussion Papers 4989, Institute of Labor Economics (IZA).
    10. Moritz Zöllner & Michael Fritsch & Michael Wyrwich, 2016. "An Evaluation of German Active Labor Market Policies and its Entrepreneurship Promotion," Jena Economic Research Papers 2016-022, Friedrich-Schiller-University Jena.
    11. L. Behrenz & L. Delander & J. Månsson, 2016. "Is Starting a Business a Sustainable way out of Unemployment? Treatment Effects of the Swedish Start-up Subsidy," Journal of Labor Research, Springer, vol. 37(4), pages 389-411, December.
    12. Wolff, Joachim & Nivorozhkin, Anton, 2008. "Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany," IAB-Discussion Paper 200820, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Dettmann, E. & Becker, C. & Schmeißer, C., 2011. "Distance functions for matching in small samples," Computational Statistics & Data Analysis, Elsevier, vol. 55(5), pages 1942-1960, May.
    14. Jan Marcus, 2014. "Does Job Loss Make You Smoke and Gain Weight?," Economica, London School of Economics and Political Science, vol. 81(324), pages 626-648, October.
    15. Tommaso Nannicini, 2007. "Simulation-based sensitivity analysis for matching estimators," Stata Journal, StataCorp LP, vol. 7(3), pages 334-350, September.
    16. Jacobi, Lena & Kluve, Jochen, 2007. "Before and after the Hartz reforms: The performance of active labour market policy in Germany," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(1), pages 45-64.
    17. Alm, Bastian & Bade, Franz-Josef, 2009. "The impact of firm subsidies: Evaluating German regional policy," EconStor Preprints 103402, ZBW - Leibniz Information Centre for Economics.
    18. Biewen, Martin & Fitzenberger, Bernd & Osikominu, Aderonke & Waller, Marie, 2007. "Which Program for Whom? Evidence on the Comparative Effectiveness of Public Sponsored Training Programs in Germany," IZA Discussion Papers 2885, Institute of Labor Economics (IZA).
    19. Baris Ucar & Gianni Betti, 2016. "The effect of a newborn on household poverty: a multi-indicator analysis," Department of Economics University of Siena 742, Department of Economics, University of Siena.
    20. Caliendo, Marco & Tübbicke, Stefan, 2019. "Do Start-Up Subsidies for the Unemployed Affect Participants' Well-Being? A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies," IZA Discussion Papers 12755, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • 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
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    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:bla:obuest:v:70:y:2008:i:3:p:347-373. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/sfeixuk.html .

    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: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sfeixuk.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.