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Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France

Johan Hombert (), Antoinette Schoar (), David Sraer () and David Thesmar

No 1020, Les Cahiers de Recherche from HEC Paris

Abstract: We investigate how a large-scale French reform to reduce the risk from small business creation for unemployed workers, affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. However, there are large crowd-out effects: Employment in incumbent firms decreases by a similar magnitude as the number of new jobs created in start-ups. These results point to the importance of Schumpeterian dynamics when facilitating entry.

Keywords: Entrepreneurship; Unemployment insurance; Crowding out (search for similar items in EconPapers)
JEL-codes: G00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent and nep-sbm
Date: 2013-07-09
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1020

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