Regional Effect Heterogeneity of Start-Up Subsidies for the Unemployed

No 7460, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Recent microeconometric evaluation studies have shown that start-up subsidies for unemployed individuals are an effective policy tool to improve long-term employment and income prospects of participants, in particular compared to other active labor market programs (e.g. training, job search assistance or job creation schemes). What has not been examined yet are the potentially heterogeneous effects of start-up programs across regional labor markets. Labor demand side restrictions in areas with relatively bad labor market conditions generally increase entries into start-up programs as job offers are limited and starting an own business is an opportunity to leave unemployment. However, the survival of firms in deprived areas is also lower, such that the overall effect remains an empirical question. We use a combination of administrative and survey data and observe participants in two distinct start-up programs in Germany for five years after start-up as well as a control group of unemployed who did not enter these programs. We add information on unemployment rates and GDP per capita at the labor agency district level to distinguish regional labor markets. Using propensity score matching methods we find supportive evidence that the founding process and development of businesses as well as program effectiveness is influenced by prevailing economic conditions at start-up.

Keywords: regional effects; effect heterogeneity; evaluation; start-up subsidies; self-employment (search for similar items in EconPapers)
JEL-codes: C14 H43 J68 L26 R11 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2013-06
New Economics Papers: this item is included in nep-ent, nep-lab and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published - published in: Regional Studies, 2014, 48 (6), 1108-1134

Downloads: (external link)
https://docs.iza.org/dp7460.pdf (application/pdf)

Related works:
Journal Article: Regional Effect Heterogeneity of Start-up Subsidies for the Unemployed (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp7460

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().