Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany

"In recent years activation of means-tested unemployment benefit recipients has become a major issue of European labour market policy. We study the effect of participation in a new business start-up scheme for needy unemployed people in Germany. The programme was introduced at the beginning of the year 2005 together with a new means-tested benefit system. We used data from administrative records to draw a sample of needy participants who entered the programme from February to April 2005 and of an adequate control group. Even though these data are quite rich in terms of information on the labour market performance and individual and household characteristics, they do not provide information on unsubsidised self-employment. Therefore, using matching methods we estimate the impact of the programme participation on the outcomes 'neither being registered as unemployed nor as a job-seeker' and 'no receipt of unemployment benefit II'. Our estimates imply that even by the time when nearly no participant receives the start-up subsidy any longer treatment reduces considerably the proportion of registered job-seekers and of means-tested benefit recipients among the treated. Moreover, there is no substantial variation of these effects over different population groups." (Author's abstract, IAB-Doku) ((en))