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

Authors


  • *

    The authors thank Arne Uhlendorff, Viktor Steiner, one anonymous referee and the editors for valuable comments and Steffen Künn for excellent research assistance. Helpful comments were also received from seminar and conference participants in Berlin (BeNa), Stockholm (RATIO Colloquium), Budapest (ESEM), Munich (Verein für Socialpolitik), Nuremberg (CAPE) and Bonn (SPEAC/IZA). Hans J. Baumgartner left DIW Berlin before this paper was accepted for publication in the Bulletin.

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.

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