• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar

IZA Newsroom

IZA – Institute of Labor Economics

  • Home
  • Archive
  • Press Lounge
  • DE
  • EN
ResearchJuly 8, 2013

Why start-up subsidies even help in labor market slumps

Subsidizing unemployed workers to start their own business has been proven an effective policy tool to improve long-term employment and income prospects of unemployed. One open question is whether these labor market programs also work in regions with bad labor market conditions: on the one hand, subsidies might be highly effective given few vacancies; on the other hand, adverse labor market conditions might jeopardize the long-term economic success of the start-up. A new IZA discussion paper by Marco Caliendo and Steffen Künn investigates this trade-off using data on participants in German start-up subsidy programs. The authors show that even in regions with bad labor market conditions unemployed individuals in start-up programs do – mostly – better than people in privileged labor markets. This effect is mainly driven by the bad labor market prospects of the non-participants, rather than by differences in firm performance of the newly founded enterprise under different circumstances. The authors conclude that policy makers should continue to provide start-up subsidies to unemployed individuals in the future — especially in regions with unfavorable labor market conditions.

Featured paper

IZA Discussion Paper No. 7460 Regional Effect Heterogeneity of Start-Up Subsidies for the Unemployed Marco Caliendo, Steffen Künn

Share this article

Share on X Share on Facebook Share on LinkedIn Share via e-mail
  • active labor market policy
  • Germany
  • labor market conditions
  • self-employment
  • start-up subsidies
  • unemployment
  • Marco Caliendo
  • Steffen Künn
Previous Post
Shuffle
Next Post

Reader Interactions

Primary Sidebar

Recent Posts

  • June 4, 2025

    How workplaces shape the economic impact of caregiving shocks on mothers
  • June 2, 2025

    How administrative data fosters young economists’ careers
  • May 30, 2025

    Raising the glass raises risks for the whole family

Related Content

  • March 29, 2016

    Turning unemployed into self-employed can be an effective alternative to traditional labor market policies
  • March 14, 2013

    Ten years of “Agenda 2010”
  • April 13, 2016

    From a global perspective: Assessing the effects of labor market reforms
  • 
  • 
  • Archive
  • 
  • Research
  • 
  • Why start-up subsidies even help in labor market slumps

© 2013–2025 Deutsche Post STIFTUNGImprint | Privacy PolicyIZA