IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Start-ups by the unemployed: characteristics, survival and direct employment effects

  • Marco Caliendo


  • Alexander Kritikos


Fostering and supporting start-up businesses by unemployed persons has become an increasingly important issue in many European countries. These new ventures are being supported by various governmental programs. Potential benefits include not only the end of unemployment for the new entrepreneur but also some further positive effects, e.g., direct job creation. However, it is often feared that the previously unemployed lack the basic qualifications to become entrepreneurs. Empirical evidence on skill-composition, direct job creation and other key variables is rather scarce, largely because of inadequate data availability. We base our analysis on a unique and very informative survey data containing a representative sample of over 3,100 start-ups founded by unemployed persons in Germany. Individuals were subsidized under two different schemes, and we are able to draw on extensive pre- and post-founding information concerning the characteristics of the business (start-up capital, industry, etc.) and of the business founders (education, motivation, preparation, etc.). We find that formerly unemployed founders are motivated by push and pull factors. Using a proportional hazard duration model with unobserved heterogeneity allows us to analyze the characteristics which drive success of the businesses. While survival rates 2.5 years after business founding are quite high (around 70%) for both programs and genders, the characteristics of the newly developed businesses are heterogeneous.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 35 (2010)
Issue (Month): 1 (July)
Pages: 71-92

in new window

Handle: RePEc:kap:sbusec:v:35:y:2010:i:1:p:71-92
Contact details of provider: Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Franz Kronthaler, 2005. "Economic capability of East German regions: Results of a cluster analysis," Regional Studies, Taylor & Francis Journals, vol. 39(6), pages 739-750.
  2. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2005. "Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 365-391, June.
  3. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey," IZA Discussion Papers 2168, Institute for the Study of Labor (IZA).
  4. Fritsch, Michael & Mueller, Pamela, 2006. "The effect of new business formation on regional development over time: the case of Germany," Freiberg Working Papers 2006,13, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  5. Brixy, Udo & Kohaut, Susanne & Schnabel, Claus, 2004. "Do newly founded firms pay lower wages? : first evidence from Germany," IAB Discussion Paper 200404, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. Audretsch, David & Vivarelli, Marco, 1995. "New-firm formation in Italy: A first report," Economics Letters, Elsevier, vol. 48(1), pages 77-81, April.
  7. Marco Caliendo & Alexander S. Kritikos, 2007. "Die reformierte Gründungsförderung für Arbeitslose: Chancen und Risiken," Working Papers 0009, Gesellschaft für Arbeitsmarktaktivierung (GfA).
  8. Rudolf Winter-Ebmer & Josef Zweimueller, . "Firm Size Wage Differentials in Switzerland: Evidence from Job Changers," IEW - Working Papers 001, Institute for Empirical Research in Economics - University of Zurich.
  9. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  10. Robert Fairlie, 2005. "Entrepreneurship and Earnings among Young Adults from Disadvantaged Families," Small Business Economics, Springer, vol. 25(3), pages 223-236, October.
  11. Blanchflower, D. & Oswald, A., 1990. "What Makes A Young Entrepreneur?," Papers 373, London School of Economics - Centre for Labour Economics.
  12. 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.
  13. Parker, Simon C. & van Praag, C. Mirjam, 2006. "Schooling, Capital Constraints, and Entrepreneurial Performance: The Endogenous Triangle," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 416-431, October.
  14. Eichhorst, Werner & Zimmermann, Klaus F, 2007. "And Then There Were Four... How Many (and Which) Measures of Active Labour Market Policy Do We Still Need?," CEPR Discussion Papers 6246, C.E.P.R. Discussion Papers.
  15. Michael Fritsch, 2004. "Entrepreneurship, Entry and Performance of New Businesses Compared in two Growth Regimes: East and West Germany," Papers on Entrepreneurship, Growth and Public Policy 2004-41, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  16. Pernilla Andersson & Eskil Wadensjö, 2007. "Do the unemployed become successful entrepreneurs?," International Journal of Manpower, Emerald Group Publishing, vol. 28(7), pages 604-626, November.
  17. Baumgartner, Hans J. & Caliendo, Marco, 2007. "Turning Unemployment into Self-Employment: Effectiveness and Efficiency of Two Start-Up Programmes," IZA Discussion Papers 2660, Institute for the Study of Labor (IZA).
  18. 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.
  19. Michael Fritsch & Antje Weyh, 2006. "How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany," Small Business Economics, Springer, vol. 27(2), pages 245-260, October.
  20. 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.
  21. 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)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:35:y:2010:i:1:p:71-92. 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: (Sonal Shukla)

or (Christopher F. Baum)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.