The Evaluation of Start-Up Subsidies for the Unemployed and the Role of Unobserved Characteristics for Matching Estimators

Martin Weißenberger, Marco Caliendo and Steffen Künn ()

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: Start-up subsidies for the unemployed have become an important part of Active Labor Market Policy (ALMP) in many countries. Previous evaluation results show pre-dominantly (very) positive results indicating that these programs are an effective way to increase employment probabilities and income of participants. Most of the studies are using matching estimators based on the conditional independence assumption (CIA) to estimate these effects and are prone to bias if there are unobserved factors affecting the selection process into the programs. From the entrepreneurship literature we know that entrepreneurs are different , e.g., with respect to personality traits, non-cognitive skills and risk preferences. Since most of the previous evaluation studies are based on administrative data, information on such variables is not available. This raises the question whether the effects are potentially over-estimated. We have access to data which allow us to model the selection process with and without usually unobserved personality characteristics and to examine the consequences for the estimated propensity scores and treatment effects. We show that openness to new experiences and internal/external locus of control have a significant influence on selection into treatment (and labor market outcomes). Our empirical findings also indicate that neglecting personality traits in the program evaluation leads to slight over-estimation of the average treatment effects on the treated which still remain positive and significant even after controlling for relevant personality traits.

JEL-codes: C14 J68 L26 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/79714/1/VfS_2013_pid_340.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79714

Access Statistics for this paper

More papers in VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().