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Start-Ups by the Unemployed: Characteristics, Survival and Direct Employment Effects

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Abstract

Supporting start-ups by unemployed persons with governmental programs became an important issue as benefits could include termination of unemployment and further job creation. However, it is feared that previously unemployed lack qualifications for entrepreneurship. We analyze potential effects based on a data-set containing a representative sample of 3,100 start-ups founded by unemployed in Germany. We find that these 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 are high, the characteristics of the developed businesses are heterogeneous.

Suggested Citation

  • Marco Caliendo & Alexander S. Kritikos, 2008. "Start-Ups by the Unemployed: Characteristics, Survival and Direct Employment Effects," Working Papers 008, Hanseatic University, Germany, Department of Economics.
    • Handle: RePEc:phu:wpaper:008
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    JEL classification:

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

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