TY - RPRT A1 - Caliendo, Marco A1 - Künn, Steffen A1 - Weißenberger, Martin T1 - Catching up or Lagging Behind? BT - The Long-Term Business and Innovation Potential of Subsidized Start-Ups out of Unemployment T2 - CEPA Discussion Papers N2 - From an active labor market policy perspective, start-up subsidies for unemployed individuals are very effective in improving long-term labor market outcomes for participants. From a business perspective, however, the assessment of these public programs is less clear since they might attract individuals with low entrepreneurial abilities and produce businesses with low survival rates and little contribution to job creation, economic growth, and innovation. In this paper, we use a rich data set to compare participants of a German start-up subsidy program for unemployed individuals to a group of regular founders who started from nonunemployment and did not receive the subsidy. The data allows us to analyze their business performance up until 40 months after business formation. We find that formerly subsidized founders lag behind not only in survival and job creation, but especially also in innovation activities. The gaps in these business outcomes are relatively constant or even widening over time. Hence, we do not see any indication of catching up in the longer run. While the gap in survival can be entirely explained by initial differences in observable start-up characteristics, the gap in business development remains and seems to be the result of restricted access to capital as well as differential business strategies and dynamics. Considering these conflicting results for the assessment of the subsidy program from an ALMP and business perspective, policy makers need to carefully weigh the costs and benefits of such a strategy to find the right policy mix. T3 - CEPA Discussion Papers - 12 KW - Entrepreneurship KW - Start-up Subsidies KW - Business Grow KW - Innovation KW - Job Creation Y1 - 2019 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-437012 SN - 2628-653X IS - 12 ER - TY - RPRT A1 - Caliendo, Marco A1 - Mahlstedt, Robert A1 - van den Berg, Gerard J. A1 - Vikström, Johan T1 - Side Effects of Labor Market Policies T2 - CEPA Discussion Papers N2 - Labor market policy tools such as training and sanctions are commonly used to help bring workers back to work. By analogy to medical treatments, the individual exposure to these tools may have side effects. We study effects on health using individual-level population registers on labor market events outcomes, drug prescriptions and sickness absence, comparing outcomes before and after exposure to training and sanctions. We find that training improves cardiovascular and mental health and lowers sickness absence. The results suggest that this is not due to improved employment prospects but rather to instantaneous features of participation such as, perhaps, the adoption of a more rigorous daily routine. Unemployment benefits sanctions cause a short-run deterioration of mental health, possibly due higher stress levels, but this tapers out quickly. T3 - CEPA Discussion Papers - 22 KW - unemployment KW - health KW - sickness KW - prescriptions KW - mental health KW - drugs KW - training KW - depression KW - cardiovascular disease KW - sanctions Y1 - 2020 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-478839 SN - 2628-653X IS - 22 ER - TY - RPRT A1 - Caliendo, Marco A1 - Tübbicke, Stefan T1 - New Evidence on Long-Term Effects of Start-Up Subsidies BT - Matching Estimates and their Robustness T2 - CEPA Discussion Papers N2 - The German start-up subsidy (SUS) program for the unemployed has recently undergone a major make-over, altering its institutional setup, adding an additional layer of selection and leading to ambiguous predictions of the program’s effectiveness. Using propensity score matching (PSM) as our main empirical approach, we provide estimates of long-term effects of the post-reform subsidy on individual employment prospects and labor market earnings up to 40 months after entering the program. Our results suggest large and persistent long-term effects of the subsidy on employment probabilities and net earned income. These effects are larger than what was estimated for the pre-reform program. Extensive sensitivity analyses within the standard PSM framework reveal that the results are robust to different choices regarding the implementation of the weighting procedure and also with respect to deviations from the conditional independence assumption. As a further assessment of the results’ sensitivity, we go beyond the standard selection-on-observables approach and employ an instrumental variable setup using regional variation in the likelihood of receiving treatment. Here, we exploit the fact that the reform increased the discretionary power of local employment agencies in allocating active labor market policy funds, allowing us to obtain a measure of local preferences for SUS as the program of choice. The results based on this approach give rise to similar estimates. Thus, our results indicating that SUS are still an effective active labor market program after the reform do not appear to be driven by “hidden bias”. T3 - CEPA Discussion Papers - 6 KW - Start-Up Subsidies KW - Policy Reform KW - Matching KW - Instrumental Variables Y1 - 2019 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-426798 SN - 2628-653X IS - 6 ER - TY - RPRT A1 - Caliendo, Marco A1 - Tübbicke, Stefan T1 - Do Start-Up Subsidies for the Unemployed Affect Participants’ Well-Being? BT - A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies T2 - CEPA Discussion Papers N2 - We estimate the long-term effects of start-up subsidies (SUS) for the unemployed on subjective outcome indicators of well-being, as measured by the participants’ satisfaction in different domains. This extends previous analyses of the current German SUS program (“Gründungszuschuss”) that focused on objective outcomes – such as employment and income – and allows us to make a more complete judgment about the overall effects of SUS at the individual level. This is especially important because subsidizing the transition into self-employment may have unintended adverse effects on participants’ well-being due to its risky nature and lower social security protection, especially in the long run. Having access to linked administrative-survey data providing us with rich information on pre-treatment characteristics, we base our analysis on the conditional independence assumption and use propensity score matching to estimate causal effects within the potential outcomes framework. We find long-term positive effects on job satisfaction but negative effects on individuals’ satisfaction with their social security situation. Further findings suggest that the negative effect on satisfaction with social security may be driven by negative effects on unemployment and retirement insurance coverage. Our heterogeneity analysis reveals substantial variation in effects across gender, age groups and skill levels. The sensitivity analyses show that these findings are highly robust. T3 - CEPA Discussion Papers - 14 KW - Start-Up Subsidies KW - Propensity Score Matching KW - Counterfactual Analysis KW - Well-Being Y1 - 2019 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-437468 SN - 2628-653X IS - 14 ER - TY - RPRT A1 - Caliendo, Marco A1 - Künn, Steffen A1 - Mahlstedt, Robert T1 - The Intended and Unintended Effects of Promoting Labor Market Mobility T2 - CEPA Discussion Papers N2 - Subsidizing the geographical mobility of unemployed workers may improve welfare by relaxing their financial constraints and allowing them to find jobs in more prosperous regions. We exploit regional variation in the promotion of mobility programs along administrative borders of German employment agency districts to investigate the causal effect of offering such financial incentives on the job search behavior and labor market integration of unemployed workers. We show that promoting mobility – as intended – causes job seekers to increase their search radius, apply for and accept distant jobs. At the same time, local job search is reduced with adverse consequences for reemployment and earnings. These unintended negative effects are provoked by spatial search frictions. Overall, the unconditional provision of mobility programs harms the welfare of unemployed job seekers. T3 - CEPA Discussion Papers - 42 KW - Job Search KW - Active Labor Market Policy KW - Labor Market Mobility KW - Unintended Consequence KW - Search Frictions Y1 - 2022 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-535229 SN - 2628-653X ER - TY - RPRT A1 - Caliendo, Marco A1 - Tübbicke, Stefan T1 - Design and Effectiveness of Start-Up Subsidies BT - Evidence from a Policy Reform in Germany T2 - CEPA Discussion Papers N2 - While a growing body of literature finds positive impacts of Start-Up Subsidies (SUS) on labor market outcomes of participants, little is known about how the design of these programs shapes their effectiveness and hence how to improve policy. As experimental variation in program design is unavailable, we exploit the 2011 reform of the current German SUS program for the unemployed which strengthened case-workers’ discretionary power, increased entry requirements and reduced monetary support. We estimate the impact of the reform on the program’s effectiveness using samples of participants and non-participants from before and after the reform. To control for time-constant unobserved heterogeneity as well as differential selection patterns based on observable characteristics over time, we combine Difference-in-Differences with inverse probability weighting using covariate balancing propensity scores. Holding participants’ observed characteristics as well as macroeconomic conditions constant, the results suggest that the reform was successful in raising employment effects on average. As these findings may be contaminated by changes in selection patterns based on unobserved characteristics, we assess our results using simulation-based sensitivity analyses and find that our estimates are highly robust to changes in unobserved characteristics. Hence, the reform most likely had a positive impact on the effectiveness of the program, suggesting that increasing entry requirements and reducing support in-creased the program’s impacts while reducing the cost per participant. T3 - CEPA Discussion Papers - 30 KW - Start-Up Subsidies KW - Institutions KW - Policy Reform KW - Difference-in-Differences Y1 - 2021 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-500056 SN - 2628-653X IS - 30 ER -