"Fine...I'll do it myself": Lessons from self-employment grants in a long recession period

Stjepan Srhoj and Ivan Zilic ()

No 2001, Working Papers from The Institute of Economics, Zagreb

Abstract: This paper evaluates the effect of a self-employment grant scheme for unemployed individuals-designed to ease the first 12 months of business operation-on firm growth, survival, and labor market re-integration in Croatia in the 2010-2017 period. Grants offered a moderate amount of finances (up to 50% of average annual gross salary) and absorbed only 5% of funds allocated to active labor market policies, but accounted for 10% of new firms opened throughout the years. We use the universe of unemployment episodes and the universe of unlimited and limited liability firms to document the effect of self-employment grants both causally and descriptively. Exploiting longitudinal structure of unemployment episodes dataset, we find that individuals who finish their spell with a grant have a significantly lower probability of returning to unemployment. Also, we find that limited liability firms opened via a grant have lower growth potential and worse survival profile, while unlimited liability firms-even though a sizable portion of them closes after a required 12-month grant period-have a more favorable survival profile. While these results are in line with the rest of the empirical literature on the self-employment grants, we also find that the effectiveness of these grants has increased throughout the years, indicating towards the direction of institutional learning.

Keywords: self-employment grant; evaluation; unemployment; firm performance (search for similar items in EconPapers)
JEL-codes: H25 H43 J68 M13 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2020-01
New Economics Papers: this item is included in nep-bec, nep-ent, nep-eur, nep-lab and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: “Fine...I’ll do it myself”: Lessons from self-employment grants in a long recession period (2021)
Working Paper: Fine....I'll do it myself: lessons from self-employment grants in a long recession period (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:iez:wpaper:2001

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