Regional Effect Heterogeneity of Start-up Subsidies for the Unemployed

Abstract

Caliendo M. and Künn S. Regional effect heterogeneity of start-up subsidies for the unemployed, Regional Studies. Evaluation studies have shown the high effectiveness of start-up subsidies for unemployed individuals to improve labour market outcomes of participants. What has not been examined yet are the potentially heterogeneous effects of start-up programmes across regional labour markets. Labour demand-side restrictions in deprived areas generally increase entries into start-up programmes as job offers are limited. However, the survival of firms in these areas is also lower, such that the overall effect remains unclear. Based on German data, it is found that the founding process, development of businesses and programme effectiveness are influenced by prevailing economic conditions at start-up.

Caliendo M. and Künn S. 为失业者提供创业补助金的区域效应异质性，区域研究。评估研究显示，提供失业者创业补助金，可以有效增进参与者的劳动市场结果。但创业计画在各区域劳动市场中的潜在异质效应，却尚未被检验。一般而言，较为贫困的地区由于就业供给有限，因此劳动需求面的限制促使创业方案参与的增加。但企业在这些区域的存活率却也较低，致使总体效应不甚明确。本研究根据德国的数据，发现创业过程、商业发展以及计画的有效性，受到创业时普遍的经济条件所影响。

Caliendo M. et Künn S. L'effet régional hétérogène des subventions de démarrage en faveur des chômeurs, Regional Studies. Des études d’évaluation ont démontré l'efficacité importante des subventions de démarrage en faveur des chômeurs pour améliorer les résultats sur le marché du travail des participants. Ce que l'on n'a pas encore examiné ce sont les effets hétérogènes potentiels des programmes qui favorisent la création d'entreprises dans l'ensemble des marchés du travail régionaux. En règle générale, les contraintes du côté de la demande du travail dans les zones défavorisées augmentent la demande de participer aux programmes qui favorisent la creation d'entreprises parce que les offres d'emploi sont limitées. Cependant, le taux de survie des entreprises dans de telles zones est aussi moins élevé, à tel point que l'effet global reste moins certain. À partir des données pour l'Allemagne, il est constaté que la phase de démarrage, la création d'entreprises et l'efficacité des programmes sont influés par le climat économique actuel au moment du démarrage.

Caliendo M. und Künn S. Regionale Effektheterogenität von Existenzgründungszuschüssen für Arbeitslose, Regional Studies. Bisherige Evaluationsstudien haben gezeigt, dass Existenzgründungszuschüsse für Arbeitslose die Arbeitsmarktchancen der teilnehmenden Personen deutlich verbessern. Es wurde jedoch noch nicht untersucht, inwiefern die Effektivität dieser Programme in verschiedenen regionalen Arbeitsmärkten bzw. Arbeitsmarktlagen variiert. Schlechte Arbeitsmarktbedingungen mit wenigen Jobangeboten führen in der Regel zu einem stärkeren Übergang von arbeitslosen Personen in Existenzgründungsprogramme, wobei gleichzeitig die Überlebenswahrscheinlichkeit der dort gegründeten Unternehmen aufgrund der schlechten Bedingungen niedriger sein kann. Der Gesamteffekt bleibt damit unklar und muss empirisch bestimmt werden. Die vorliegende Studie zeigt für Deutschland, dass der Gründungsprozess, die Unternehmensentwicklung und auch die Programmeffektivität von Existenzgründungsprogrammen stark von den zum Gründungszeitpunkt vorherrschenden ökonomischen Bedingungen beeinflusst wird.

Caliendo M. y Künn S. Heterogeneidad del efecto regional en las subvenciones a proyectos empresariales para desempleados, Regional Studies. En estudios de evaluación se ha demostrado que las subvenciones a proyectos empresariales para personas en paro son muy eficaces a la hora de mejorar los resultados de los participantes en el mercado laboral. Sin embargo, todavía no se han analizado los efectos potencialmente heterogéneos de los programas para proyectos empresariales en los diferentes mercados laborales de ámbito regional. Las restricciones en la demanda de empleo en áreas más desfavorecidas generalmente hacen aumentar el número de personas que aprovechan estos programas porque las ofertas laborales son limitadas. Sin embargo, la supervivencia de empresas en estas áreas es también más baja, de modo que sigue sin estar claro el efecto general. Basándonos en datos alemanes, observamos que el proceso de creación, el desarrollo de negocios y la eficacia de los programas están influenciados por las condiciones económicas imperantes en el momento de la creación de la empresa.

• Start-up subsidies
• Evaluation
• Effect heterogeneity
• Regional effects
• Self-employment

• 创业补助金
• 评估
• 效应异质性
• 区域效应
• 自雇

• Subventions de démarrage
• Évaluation
• Effet hétérogène
• Effets régionaux
• Travail indépendant

• Existenzgründungszuschüsse
• Bewertung
• Heterogenität von Effekten
• Regionale Auswirkungen
• Selbstständigkeit

• Subvenciones a proyectos empresariales
• Evaluación
• Heterogeneidad del efecto
• Efectos regionales
• Empleo autónomo

JEL classifications:

• C14
• J68
• L26
• R11

Acknowledgements

The authors thank the special issue Editors, Michael Fritsch and David Storey, and two anonymous referees for valuable comments.

Funding

Financial support by the Institute for Employment Research (IAB) in Nuremberg [research grant number 1007] is gratefully acknowledged.

Notes

1. This is not necessarily true for subgroups of the workforce. For instance, when McVicar and Podivinsky (2010) consider unemployed youths and investigate the effect of the New Deal for Young People in Britain, they find an inverse ‘U’-shaped relationship between programme effectiveness and unemployment rates.

2. While the availability of workers to new firms predicts a clear positive impact on firm survival, the effect of economic growth and start-up rates out of unemployment is ambiguous. For a detailed discussion on how economic factors might affect business survival, see Fritsch et al. (2006) and Falck (2007).

3. This is in line with findings by Lechner and Wunsch (2009) who show that training programmes in Germany lead to larger employment effects if unemployment is high in terms of both periods and regions. The authors argue that non-participants are less likely to find a job during periods of high unemployment and if then probably worse jobs. In contrast, participants are locked into the programme when unemployment is high and might face better search and economic conditions if the programme elapses.

4. On average, BA male participants in the sample received €1077 of unemployment benefits per month during their unemployment spell. Given the additional lump sum payment for social security of 68.5%, this corresponds to an average BA payment of €1814 per month.

5. In practice the burden to get such a business plan is quite low so that the impact on the quality of business start-ups is rather ambiguous. Public institutions such as chambers of commerce and industry implemented a standardized procedure to provide individuals with such documents. However, there are no data on subsidized business start-ups after November 2004 so that its impact cannot be empirically evaluated.

6. Having access to only one particular quarter of entrants bears the risk of a selective sample. However, comparing the distribution of certain characteristics (e.g. age and educational background) across different quarters does not show any significant differences.

7. However, individuals in the control group are allowed to participate in ALMP programmes afterwards. The actual number of non-participants who participated in ALMP programmes after the third quarter of 2003 is rather low. Approximately 29% of all non-participants were assigned to programmes of ALMP and only 3% participated in SUS or BA within the observation period.

8. For a more extensive discussion of data construction, see Caliendo and Künn (2011).

9. Caliendo and Künn (2012) provide evidence on the effectiveness of start-up programmes for unemployed women by taking female-specific needs into account.

10. Although business formation influences economic development on the aggregate level (Storey, 1994; Audretsch and Keilbach, 2004; Fritsch, 2008), the prevailing local economic conditions are assumed to be exogenous to new entries into self-employment.

11. The sample is additionally stratified by dividing the respective distributions into four equal parts. Results are similar and lead to the same conclusion. However, lower numbers of observation in each cell result in poor matching quality, which is why it was decided to take three categories as the preferred strategy.

12. The sample was also categorized based on the distribution of unemployment rates and GDP measured at the end of the observation window, i.e. May–June 2008, and it was compared with the initial categorization. It was found that 82% of individuals were assigned to the same category in terms of unemployment rates and 95% in terms of GDP per capita.

13. The willingness of individuals to participate in the survey decreased over time. On average, 46% of all participants and 37% of all non-participants were observed for the entire period of 56 months. The attrition induced a positive selection, i.e. individuals who perform relatively well in terms of labour market outcomes are more likely to respond. Therefore, sequential inverse probability weighting was used to adjust for selective attrition. However, the causal analysis relies on unweighted outcome variables as participants and non-participants are similarly affected by selection due to panel attrition.

14. This is in line with findings by Tokila (2009) who ran a survival analysis on subsidized start-ups out of unemployment in Finland and found that regional characteristics have only a minor impact on the exit rate.

15. For further discussion, see, for example Caliendo and Hujer (2006).

16. Only the main findings of the robustness tests are stated here. Detailed results are available from the authors upon request.

17. In 2003, 254 000 individuals participated in SUS or BA compared with 183 000 (295 000) entries in wage subsidies (vocational training) in Germany.

18. For a more extensive discussion of the estimation of propensity scores, see Heckman et al. (1998) and Caliendo and Kopeinig (2008), among others.

19. For a more detailed discussion of matching quality issues, see Caliendo and Kopeinig (2008).

20. All results are available from the authors upon request.

21. Keep in mind that unemployment rates and GDP are not perfectly correlated so that the subsamples (poor/medium/good) contain partly different individuals using the unemployment rate or GDP metric (see the fourth section). This explains the slightly different results.