IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11055.html

Some searches may not work properly. We apologize for the inconvenience.

   My bibliography  Save this paper

The Post-Reform Effectiveness of the New German Start-Up Subsidy for the Unemployed

Author

Listed:
  • Bellmann, Lutz

    (Institute for Employment Research (IAB), Nuremberg)

  • Caliendo, Marco

    (University of Potsdam)

  • Tübbicke, Stefan

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Start-up subsidies for the unemployed have long been an important active labor market policy strategy in Germany. The current subsidy program underwent a major reform in 2011 that changed its key parameters: support was lowered, eligibility criteria were tightened and entitlement was abandoned by granting caseworkers the right to reject applications. Ex-ante predictions on the post-reform effectiveness of the program are ambiguous, and knowledge about the importance of institutional details of such a program is very limited, making a new evaluation necessary. In our descriptive analysis, we compare personal and business characteristics of participants before and after the reform and we find significant differences in terms of gender composition, educational attainment and industry-specific experience. Post-reform participants also perform better in terms of subsequent labor market integration and show signs of higher commitment. These findings give us some indication for interpreting our estimates of causal effects of the post-reform program. We find that for both men and women, employment and income effects of the post-reform program are positive, sizable, and larger than what was estimated for the pre-reform program. All in all, the programs effectiveness seems to have improved through the reform. Potential reasons for this are discussed and include better screening of participants by caseworkers, higher rates of commitment and changes in macroeconomic conditions.

Suggested Citation

  • Bellmann, Lutz & Caliendo, Marco & Tübbicke, Stefan, 2017. "The Post-Reform Effectiveness of the New German Start-Up Subsidy for the Unemployed," IZA Discussion Papers 11055, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11055
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11055.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Núria Rodríguez-Planas & Benus Jacob, 2010. "Evaluating active labor market programs in Romania," Empirical Economics, Springer, vol. 38(1), pages 65-84, February.
    8. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    9. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    10. 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.
    11. Lechner, Michael & Wunsch, Conny, 2013. "Sensitivity of matching-based program evaluations to the availability of control variables," Labour Economics, Elsevier, vol. 21(C), pages 111-121.
    12. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    13. JAMES G. MacKINNON, 2006. "Bootstrap Methods in Econometrics," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 2-18, September.
    14. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    15. Verheul, Ingrid & Thurik, Roy & Grilo, Isabel & van der Zwan, Peter, 2012. "Explaining preferences and actual involvement in self-employment: Gender and the entrepreneurial personality," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 325-341.
    16. Hugo Bodory & Lorenzo Camponovo & Martin Huber & Michael Lechner, 2020. "The Finite Sample Performance of Inference Methods for Propensity Score Matching and Weighting Estimators," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 38(1), pages 183-200, January.
    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. Bernhard, Stefan & Grüttner, Michael, 2015. "Der Gründungszuschuss nach der Reform: Eine qualitative Implementationsstudie zur Umsetzung der Reform in den Agenturen," IAB-Forschungsbericht 201504, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    19. Núria Rodríguez‐Planas, 2010. "Channels through which Public Employment Services and Small Business Assistance Programmes Work," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(4), pages 458-485, August.
    20. Dauth, Wolfgang & Hirschenauer, Franziska & Rüb, Felix, 2008. "Vergleichstypen 2008: Neufassung der SGB-III-Typisierung," IAB-Forschungsbericht 200808, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    21. Barbara Sianesi, 2004. "An Evaluation of the Swedish System of Active Labor Market Programs in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 133-155, February.
    22. Caliendo, Marco & Kritikos, Alexander S., 2009. ""I Want to, But I Also Need to": Start-Ups Resulting from Opportunity and Necessity," IZA Discussion Papers 4661, Institute of Labor Economics (IZA).
    23. Evers, Katalin & Schleinkofer, Michael, 2015. "Der Gründungszuschuss vor und nach der Reform : same, but different: Ein Vergleich der Teilnehmerstrukturen," IAB-Forschungsbericht 201505, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    24. Richard Duhautois & Dominique Redor & Lionel Desiage, 2015. "Long Term Effect of Public Subsidies on Start-up Survival and Economic Performance: An Empirical Study with French Data," Revue d'économie industrielle, De Boeck Université, vol. 0(1), pages 11-41.
    25. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2013. "The performance of estimators based on the propensity score," Journal of Econometrics, Elsevier, vol. 175(1), pages 1-21.
    26. Martin Huber & Michael Lechner & Andreas Steinmayr, 2015. "Radius matching on the propensity score with bias adjustment: tuning parameters and finite sample behaviour," Empirical Economics, Springer, vol. 49(1), pages 1-31, August.
    27. 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.
    28. repec:adr:anecst:y:2008:i:91-92:p:10 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. 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).
    4. Tobias Brändle & Lukas Fervers, 2021. "Give it Another Try: What are the Effects of a Job Creation Scheme Especially Designed for Hard-to-Place Workers?," Journal of Labor Research, Springer, vol. 42(3), pages 382-417, December.
    5. 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).

    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. 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.
    2. Marco Caliendo & Stefan Tübbicke, 2019. "Do Start-Up Subsidies for the Unemployed Affect Participants’ Well-Being? A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies," CEPA Discussion Papers 14, Center for Economic Policy Analysis.
    3. Caliendo, Marco & Künn, Steffen & Weißenberger, Martin, 2016. "Personality traits and the evaluation of start-up subsidies," European Economic Review, Elsevier, vol. 86(C), pages 87-108.
    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 & 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).
    6. Céline Odding & Lucy Kok & Lennart Kroon & Marloes Lammers, 2024. "From Unemployed to Self-Employed: Analysis of Treatment Effects of a Dutch Self-Employment Programme," De Economist, Springer, vol. 172(1), pages 49-99, March.
    7. Manuela Deidda & Adriana Di Liberto & Marta Foddi & Giovanni Sulis, 2015. "Employment subsidies, informal economy and women’s transition into work in a depressed area: evidence from a matching approach," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-25, December.
    8. Caliendo, Marco & Mahlstedt, Robert & Mitnik, Oscar A., 2017. "Unobservable, but unimportant? The relevance of usually unobserved variables for the evaluation of labor market policies," Labour Economics, Elsevier, vol. 46(C), pages 14-25.
    9. Tübbicke, Stefan, 2023. "How sensitive are matching estimates of active labor market policy effects to typically unobserved confounders?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-26.
    10. 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.
    11. Sandra M. Sánchez‐Cañizares & L. Javier Cabeza‐Ramírez & M. Dolores Guerrero‐Baena, 2020. "Evaluation of self‐employment support policies using survival analysis. The discounted flat rate in Andalusia (Spain)," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1389-1411, October.
    12. 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.
    13. Hugo Bodory & Lorenzo Camponovo & Martin Huber & Michael Lechner, 2020. "The Finite Sample Performance of Inference Methods for Propensity Score Matching and Weighting Estimators," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 38(1), pages 183-200, January.
    14. Block, Joern & Kritikos, Alexander S. & Priem, Maximilian & Stiel, Caroline, 2022. "Emergency-aid for self-employed in the Covid-19 pandemic: A flash in the pan?," Journal of Economic Psychology, Elsevier, vol. 93(C).
    15. Ulf Rinne & Arne Uhlendorff & Zhong Zhao, 2013. "Vouchers and caseworkers in training programs for the unemployed," Empirical Economics, Springer, vol. 45(3), pages 1089-1127, December.
    16. Huňady Ján & Šipikal Miroslav & Pisár Peter & Hiadlovský Vladimír, 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.
    17. Huber, Martin, 2019. "An introduction to flexible methods for policy evaluation," FSES Working Papers 504, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    18. 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.
    19. Martin Huber & Michael Lechner & Giovanni Mellace, 2017. "Why Do Tougher Caseworkers Increase Employment? The Role of Program Assignment as a Causal Mechanism," The Review of Economics and Statistics, MIT Press, vol. 99(1), pages 180-183, March.
    20. Heinrich, Carolyn J. & Mueser, Peter R. & Troske, Kenneth & Jeon, Kyung-Seong & Kahvecioglu, Daver C., 2009. "New Estimates of Public Employment and Training Program Net Impacts: A Nonexperimental Evaluation of the Workforce Investment Act Program," IZA Discussion Papers 4569, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    matching; policy reform; start-up subsidies; effect heterogeneity;
    All these keywords.

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:iza:izadps:dp11055. See general information about how to correct material in RePEc.

    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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.