Does the Self-employment Policy Reduce Unemployment and Increase Employment? Empirical Evidence from the Czech Regions
Central European Journal of Public Policy 11 (2), 11-22, https://doi.org/10.1515/cejpp-2016-0032
Abstract: Empirical evidence related to the effectivity and outcomes of the self-employment programmes in the Central and Eastern Europe is still very rare, despite the important role of entrepreneurship in the economic development of post-communist economies. The main purpose of this study was to empirically investigate the impact of self-employment subsidy for unemployed in the Czech NUTS 3 regions for the period of years 2012–2015 to provide policy makers supportive material useful for policy adjustments. The study applies quantitative research framework, which is based on the construction of econometric models. Estimated regression models with region fixed effects supported the negative association between the amount of supported self-employed and unemployment rates in the Czech regions. This finding is theoretically framed by the theory of necessity entrepreneurship. Positive spillover of the programme (‘a double dividend’), was econometrically tested on the regional employment rates. Obtained estimates found that there is a positive contemporaneous relationship (weakly significant) between the number of supported self-employed and the employment rates but not in the lag. Analysis of the costs revealed that the costs of self-employment programme are not that high, if one takes into account the alternative costs of unemployment benefits paid to the unemployed and social insurance paid back to the state by the newly established self-employed. Therefore, this tool of active labour market policy has a potential of wider usage. Nevertheless, the applied empirical strategy was based on the regional level and has its limitations. Provided results need to be interpreted cautiously, without any causal inference, because the true outcomes of the programme could be analysed only on the level of supported individuals. Future research should therefore challenge the effectiveness of the start-up subsidy programmes in the Czech Republic on the level of individuals, with focus on the survival rates of subsidized businesses and incomes of their formerly unemployed owners.
Arco-Tirado, Jose L., Francisco D. Fernandez-Martin, Rick Hoyle:
Development and Validation of a Spanish Version of the Grit-S Scale
Frontiers in Psychology, Section Quantitative Psychology and Measurement, DOI: 10.3389/fpsyg.2018.00096
Abstract: This paper describes the development and initial validation of a Spanish version of the Short Grit (Grit-S) Scale. The Grit-S Scale was adapted and translated into Spanish using the Translation, Review, Adjudication, Pre-testing, and Documentation model and responses to a preliminary set of items from a large sample of university students (N = 1,129). The resultant measure was validated using data from a large stratified random sample of young adults (N = 1,826). Initial validation involved evaluating the internal consistency of the adapted scale and its subscales and comparing the factor structure of the adapted version to that of the original scale. The results were comparable to results from similar analyses of the English version of the scale. Although the internal consistency of the subscales was low, the internal consistency of the full scale was well-within the acceptable range. A two-factor model offered an acceptable account of the data; however, when a single correlated error involving two highly similar items was included, a single factor model fit the data very well. The results support the use of overall scores from the Spanish Grit-S Scale in future research.
Vancea, Mihaela, Mireia Utzet:
School-to-work transition: the case of Spanish NEETs
Journal of Youth Studies, DOI: 10.1080/13676261.2017.1421313
Abstract: The school-to-work transition in Spain has become much more difficult and extended than before, with many young people today experiencing long periods of temporary employment, unemployment or inactivity. This article investigates the main sociodemographic characteristics of Spanish young people not in education, employment or training (NEETs). It also aims to compare them with their non-NEET counterparts in terms of social capital and family background. Analyses were based on a representative sample, corresponding to the year 2016, of Spanish young individuals ages 18–35 years (n = 1.826). All analyses were stratified by gender and age group. Overall, the Spanish NEETs had lower educational levels, were mainly unemployed and married, except for NEETs between 18 and 24 years, who were rather inactive and single. They also experienced previous unemployment, had more unemployed friends, and were coming from poorer family backgrounds in comparison with their non-NEET counterparts.
Dvouletý, Ondřej :
Effects of Soft Loans and Credit Guarantees on Performance of Supported Firms: Evidence from the Czech Public Programme START
Sustainability 9 (12), 2293, DOI: 10.3390/su9122293
Abstract: The purpose of this article was to conduct an empirical evaluation of the Czech public programme START, which was funded from the European Regional Development Fund. The programme lasted from 2007–2011, and supported new entrepreneurs through the zero interest soft loans and credit guarantees. The counterfactual analysis (using three matching techniques: propensity score, nearest neighbour, and kernel) was conducted on the firm level and investigated the changes in financial performance (net profits, return on assets (ROA), return on equity (ROE), sales, assets turnover, and debt ratio) of the supported firms four years after the end of intervention. The obtained findings could not support the hypothesis assuming a positive impact of the programme on the firm’s performance. On the contrary, supported companies reported on average lower sales and lower return on assets, when compared to the control group. The remaining variables could not prove any statistically significant impact of the programme. Indicators measuring firm’s profitability (net profit, return on assets, and return on equity) suggested a negative influence of the programme and the variable representing debt ratio further indicated that firms that were supported by the programme reported on average higher debt ratio in comparison with the control group. Several policy implications are discussed in the study.
Schuck, Bettina, Nadia Steiber:
Does Intergenerational Educational Mobility Shape the Well-Being of Young Europeans? Evidence from the European Social Survey
Social Indicators Research, DOI: 10.1007/s11205-017-1753-7
Abstract: Using pooled European Social Survey data (Rounds 4–7, 2008–2014), we investigate the relationship between intergenerational educational mobility and subjective well-being (SWB) for young Europeans (N = 16,050 individuals aged 25–34 from 18 countries). Previous research has been struggling with inconclusive results due to the methodological challenge of disentangling the independent (i.e., ‘net’) effect of social mobility over and above the effects of social origin and destination. We contribute to this line of research by contrasting mobility effects estimated in a conventional linear regression framework with net mobility effects estimated by (non-linear) diagonal mobility models (DMM). We show how model selection influences estimates of mobility effects and how different specifications lead to radically different findings. Using DMM, we estimate how intergenerational educational mobility affects the SWB of young Europeans, differentiating between downward and upward mobility and different country groups. Our results suggest that status loss/gain across generations affects young adults’ SWB in addition to the level-effect of ending up in a lower/higher status position only in Continental Europe.
What is the Relationship between Entrepreneurship and Unemployment in Visegrad Countries?
Central European Business Review 6 (2), 42-53
Abstract: The presented study aims to quantify the determinants of entrepreneurship in the four countries of the Visegrad (V4) group (the Czech Republic, Hungary, Poland and Slovakia) with a particular focus on the relationship between entrepreneurship and unemployment. The purpose of the research was to analyze whether, during the periods of higher unemployment rate, individuals more likely engage into entrepreneurial activity. Data were collected from the national statistical offices of the Visegrad countries, World Bank, Eurostat and Heritage Foundation. The collected sample covered years 1998-2015. To achieve the main objective of the article, regression models with the dependent variable, the rate of registered businesses per economically active inhabitant, were quantified. Estimated regressions proved a positive relationship between entrepreneurship and unemployment. A higher unemployment rate was associated with the increase in overall entrepreneurial activity. Estimated models further confirmed the negative influence of the administrative barriers on the overall entrepreneurial activity. Several policy and research implications are discussed in the study.
Can policy makers count with positive impact of entrepreneurship on economic development of the Czech regions?
Journal of Entrepreneurship in Emerging Economies 9 (3), 286-299, DOI: 10.1108/JEEE-11-2016-0052
Abstract: The purpose of the present study is to empirically investigate the impact of the newly established entrepreneurial activity on economic development of the Czech NUTS 3 regions during the period of years 2003-2015. An econometric approach was used to validate the stated hypotheses assuming a positive relationship between the new entrepreneurial activity and regional economic growth and a negative relationship between the new entrepreneurial activity and unemployment rate. For the methods, regression models with fixed effects were estimated on the panel that included 13 Czech regions, covering the period of years 2003-2015. The new entrepreneurial activity was classified into two forms – rate of newly established self-employed set-ups per capita and rate of newly established business companies and partnership set-ups per capita. Findings: Different impacts of newly established business companies and the self-employed were found on real gross domestic product (GDP) per capita. Only the higher rates of newly established business companies and partnership were associated with higher levels of GDP per capita in the Czech regions, and no impact was found for the rate of new self-employed set-ups. Nevertheless, both forms of newly established entrepreneurial activity were associated with lower unemployment rates in the Czech regions; however, the impact of newly established business companies was significantly higher. The obtained results have several policy implications, which are discussed in the present paper. Practical implications: Support of entrepreneurship in the Czech regions may improve the situation on the local labour markets and may deliver new job opportunities through the newly established enterprises. The Czech entrepreneurship policies focused on the growth of GDP and economic boom should be oriented more on the support of high-growth enterprises (unicorns). Originality/value: The empirical analysis was conducted on the basis of the research gap in the studies related to the impact of the newly established entrepreneurial activity on the economic development of the Czech regions. Obtained results have several policy implications, which are discussed in the present paper.
Mühlböck, Monika, Julia-Rita Warmuth, Marian Holienka, Bernhard Kittel:
Desperate entrepreneurs: no opportunities, no skills
International Entrepreneurship and Management Journal, 2017, DOI: 10.1007/s11365-017-0472-5
Abstract: Promoting entrepreneurship has become an important policy strategy in Europe in the hope to stimulate the crisis-shaken economy. In this paper, we caution against undue expectations. Using data from the Global Entrepreneurship Monitor for 17 European countries, we find that a considerable proportion of the new entrepreneurs have started a business despite a negative perception of business opportunities as well as lack of confidence in their own entrepreneurial skills. This proportion has increased during the economic crisis, especially in those countries which were particularly affected by economic downturn and rising unemployment. We extend existing entrepreneurship theories to account for this phenomenon, which we call “nons-entrepreneurship”. Testing the hypotheses derived from our model, we find that the primary motivation for these people to turn to entrepreneurship is the lack of other options to enter the labour market during the economic crisis. Still, this sort of “desperate” entrepreneurship does not equal necessity based entrepreneurship, warranting further research.
Shore, Jennifer, Jale Tosun:
Assessing Youth Labour Market Services: Young People’s Perceptions and Evaluations of Service Delivery in Germany
Public Policy and Administration, August 21, 2017, DOI: 10.1177/0952076717722192
Abstract: While youth unemployment is a widely studied topic, many accounts fail to take into consideration young adults’ experiences with and perceptions of the public services they make use of. Young people’s perceptions of the services they use are closely linked to a variety of behaviours such as non-compliance, early withdrawal, or non-take-up, all of which can hinder the (re-)entry to the labour market. How young people evaluate their interactions with employment services can even have impacts on societal and political attitudes, as for many young people, these experiences represent their first interactions with the state. In this study we draw on unique survey data to offer insights into young adults’ evaluations and experiences with public employment services in Germany and discuss them in light of the structure and organizational capacity of public employment services (PES) to deliver the programmes and services young adults need. By placing the analytical focus on young people’s evaluations, we argue that although Germany is often highlighted as a highly successful case in terms of youth labour market outcomes, there is nevertheless ample room for improvement in terms of how young people assess the offerings and personal experiences with PES.
Rapp, Carolin, Jennifer Shore, Jale Tosun:
Not so risky business? How social policies shape the perceived feasibility of self-employment
Journal of European Social Policy, July 10, 2017, DOI: 10.1177/0958928717711973
Abstract: This article addresses ongoing debates about whether the welfare state hinders or fosters self-employment. Starting a business can be an inherently risky undertaking and is thus not a feasible option for all people. Policies that have the potential to shoulder some of this risk can be particularly important for the decision to enter into self-employment. Taking individual differences in terms of risk tolerance into account, we focus on unemployment protection for the self-employed – a type of risk which is particularly difficult to privately insure oneself against – in order to investigate the ways in which policy can shape people’s perceptions of self-employment. We combine individual-level data from a 2009 Flash Eurobarometer survey with country-level data on unemployment policies in Europe in a multilevel design, finding that the presence of unemployment protection for the self-employed positively influences individual perceptions of the feasibility of self-employment. Risk-tolerant individuals, moreover, are found to be even more likely to assess self-employment as a feasible option in countries that offer unemployment protection to the self-employed.
Relationship Between Unemployment and Entrepreneurship Dynamics in the Czech Regions: A Panel VAR Approach
Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 65 (3) , 987-995, DOI: 10.11118/actaun201765030987
Abstract: Investigation of the relationship between unemployment and entrepreneurship still does not provide conclusive results and scholars argue that the relationship needs to be further investigated. In the Czech context, the knowledge about entrepreneurship is still underdeveloped. The purpose of this paper is to investigate the dynamics of the relationship between unemployment and entrepreneurship, applying the methodology used by Koellinger and Thurik (2012) with usage of the quarterly data for the Czech NUTS 3 regions for the period of years 2003 – 2014. Collected sample of 672 region‑quarter observations was obtained from the Czech Statistical Office. Estimated panel vector autoregressive (VAR) models with impulse response function supported hypothesis assuming a positive relationship between unemployment and entrepreneurship, operationalized as annual growth in registered business activity. Obtained results also showed that after the shock in unemployment, dynamics of entrepreneurship increased above its initial level after two years, concluding that it may take up to two years before positive effects on entrepreneurship reveal. This finding provides value for entrepreneurship policy makers. Based on the obtained results author suggests to support entrepreneurial activity, especially during the times of higher unemployment rate.
Debus, Marc, Jale Tosun, Marcel Maxeiner:
Support for Policies on Entrepreneurship and Self-Employment among Parties and Coalition Governments
Politics & Policy 45(3), 338–371, DOI: 10.1111/polp.12205
Abstract: We argue that political parties take not only the economic conditions into account when developing a position on entrepreneurship and self-employment but also consider the “heritage” of a socialist state, which can influence the preferences of voters regarding this issue area. We test our hypotheses on the basis of an analysis of election manifestos and coalition agreements. We focus on the German case since unification allows for comparing electorates socialized in a market economy in the West German states and in a socialist economy in East Germany by holding the institutional setting constant. The results support our hypotheses that growing economic problems increase the saliency of entrepreneurship and self-employment and that differences between parties exist: Christian democratic and liberal parties emphasize entrepreneurship and self-employment in their manifestos more than green or socialist parties. In addition, governments including Christian democratic and liberals agree on more market-liberal policies in coalition agreements compared to left-wing governments.
Vegetti, Federico, Dragos Adascalitei:
The impact of the economic crisis on latent and early entrepreneurship in Europe
International Entrepreneurship and Management Journal 2017, 1-26, DOI: 10.1007/s11365-017-0456-5
Abstract: The recent economic crisis has thrown many European economies into a period of slow growth and high unemployment. While previous research looked at the impact of the crisis on aggregate indicators of entrepreneurship, not much is known about whether and how it affected individual motivations and efforts to become self-employed. This study aims to fill this gap by looking at the impact of the crisis on latent and early entrepreneurship, as well as on the link between the two. We combine individual and country-level data from 25 EU member states from2006 to 2012. Results of multilevel logistic regressions show that the decrease in entrepreneurial activity in the post-crisis period has been stronger in countries where access to finance for SMEs has been more difficult. Moreover, we show that the high level unemployment generated by the economic crisis has produced a “refugee effect” by pushing into entrepreneurship only those individuals who are not interested in such a career choice.
Tosun, Jale, Marge Unt, Eskil Wadensjö:
Youth-oriented active labour market policies: Explaining policy effort in the Nordic and the Baltic states
Social Policy & Administration 51(4), 598–616, DOI: 10.1111/spol.12315
Abstract: The starting point of this study is the seemingly striking similarity in the number of youth-oriented labour market policies adopted by the Nordic and the Baltic EU member states in 2013–14 despite markedly different welfare regimes. The similarities remain when concentrating on active labour market policies (ALMPs) and extending the observation period to 2007–15, but the application of a more refined coding scheme suggests that there are also notable cross-country differences. Estonia, Finland and Sweden are found to exhibit a relatively similar approach to youth-oriented ALMPs, while Denmark, Latvia and Lithuania are more distinct cases. The similarities in the policy effort can be explained by similar problem pressure, EU-guided policy learning and the provision of EU funding. Lastly, the policy approaches of the Nordic states indicate a path-dependency. Thus, while the youth-oriented policy effort may appear to be quite similar, important differences remain.
Promoting youth employment through multi-organizational governance
Public Money & Management Vol. 37, Iss. 1, 2017, pages 39-46, DOI: 10.1080/09540962.2016.1249230
Abstract: Public employment services are the central bodies implementing the Youth Guarantee in most EU member states, but they often act in partnership with other (public) organizations. In which member states are they the lead organization in the multi-organizational networks responsible for implementing the Youth Guarantee? Under which conditions are governance arrangements led by public employment services likely to produce the intended policy outcomes? These two research questions guide this study.
Vancea, Mihaela, Mireia Utzet:
How unemployment and precarious employment affect the health of young people? A scoping study on social determinants
Scandinavian Journal of Public Health 2017 Feb, 45 (1), 73-84, DOI: 10.1177/1403494816679555
Abstract: Background: The impact of unemployment and precarious employment on the health of young people is not well understood. However, according to social causation, higher socio-economic positions and thus better working conditions are beneficial to health in general. We tried to synthesize the results of studies that test this hypothesis in the case of young people. Methods: We conducted a scoping study mapping all the academic articles published in the period 2006–2016 in Europe. The literature was searched in PubMed/Medline, Science Direct, Web of Science and Scopus. Results: We identified 1770 studies, of which only 46 met the inclusion criteria. There are more studies that focus on the relationship between unemployment and health than between precarious employment and health (28 and 16, respectively). The vast majority of the studies (44) found support for the social causation hypothesis, the most common health outcomes being mental health disorders, health risk behaviour, poor quality of life and occupational injuries. The causal mechanisms behind this association relied mainly on the life-course perspective, the breadwinner model, and the lack of social and economic benefits provided by standard employment. Conclusions: There is evidence that young people are especially vulnerable to health problems when unemployed or working in precarious conditions. Active labour market and training programmes, inclusive social security measures, improved working conditions and targeted health programmes are important for addressing this vulnerability. Further research should strive to enhance the causal model by including a gender perspective, longitudinal data, more indicators on precariousness and third factor explanations.
Determinants of Nordic entrepreneurship
Journal of Small Business and Enterprise Development 24 (1), 12-33, https://doi.org/10.1108/JSBED-07-2016-0104
Abstract: Purpose – The purpose of this paper is to analyse the determinants of entrepreneurial activity in the Nordic countries over the period of years 2004-2013 to provide supportive material for the Nordic entrepreneurial policy makers with specific focus on the role of necessity/opportunity-driven entrepreneurship, administrative barriers and the research and development (R&D) sector. Design/methodology/approach – Quantitative study employed panel regression analysis with fixed effects estimator to test the impact of determinants on entrepreneurial activity operationalized as a rate of registered business activity and as an established business ownership rate. Findings – The results obtained for the both dependent variables did not substantially differ from each other or the supported hypothesis stating a positive relationship between unemployment rate, GDP per capita and entrepreneurial activity. Also a negative impact of administrative barriers was found. However, no statistically significant positive impact of the R&D sector was observed. Practical implications – Nordic entrepreneurial policy makers should put more effort into the reduction of administrative barriers towards founding enterprises and support entrepreneurship during the times of higher unemployment rates. Further evaluation of Nordic R&D policies is strongly needed, since no positive impacts towards entrepreneurship were found. Originality/value – The empirical analysis was conducted based on the research gap in the studies related to the Nordic entrepreneurial policies and perceived need for the policy recommendations that are provided.
Dvouletý, Ondřej, Martin Lukeš:
Review of Empirical Studies on Self- Employment out of Unemployment: Do Self-Employment Policies Make a Positive Impact?
International Review of Entrepreneurship 14 (3), 361-376
Abstract: The role of self-employment policies as a way out of unemployment has been challenged. Shane (2009) stated that incentives for starting low growth companies should be eliminated as they attract the worst entrepreneurs. However, scientific evidence analysing outcomes of selfemployment policies is, with the exception of Germany, scarce. We review 18 empirical studies published in the past ten years that focus on self-employment out of unemployment and summarize the applied approach, used data, variables, control groups and reported findings. Most studies find positive effects of self-employment policies on employment status and personal income of former unemployed individuals and increased survival rates of subsidized businesses. On the other hand, subsidized businesses underperform regular ones. We emphasize that growth cannot be taken as an all-embracing policy goal. There are other goals such as maintaining work-related skills. We suggest avenues for future research and policy recommendations including comparison of effects of various active labour market policies and taking into account local conditions.
Lukeš, Martin, Jan Zouhar:
The causes of early-stage entrepreneurial discontinuance
Prague Economic Papers 25(1), 19-36, 10.18267/j.pep.534
Abstract: A high proportion of nascent entrepreneurs do not make it to an operational venture. Even though entrepreneurial exit decisions occur more frequently than many think, the literature on entrepreneurial discontinuance is not much developed. The paper fi rst examines whether factors influencing early-stage discontinuance diff er in the Czech Republic in comparison with Western countries. Second, it contributes to existing theories on nascent entrepreneurial activity of “modest majority” low-growth businesses by focusing on the role of expectations in discontinuance decisions. A sample of nascent entrepreneurs was interviewed in 2011 and then in two follow-up waves in 2012 and 2013. Building on hubris theory of entrepreneurship and theory of performance thresholds, the paper discusses subjective decision-making about entrepreneurial launch and exit. The results show that people with higher industry experience are more likely to discontinue from nascent entrepreneurship, a finding contrasting most research in Western countries. The paper also provides added value in relating growth aspirations to solo vs. team entrepreneurship. Solo entrepreneurs with high initial expectations were found more likely to discontinue from their eff orts, whereas teams disbanded more often in case of low-ambition plans on new venture.
Vossemer, Jonas; Schuck, Bettina:
Better Overeducated than Unemployed? The Short- and Long-Term Effects of an Overeducated Labour Market Re-entry
European Sociological Review 2015 , doi: 10.1093/esr/jcv093
Abstract: Previous studies have shown that overeducation is inferior to adequate employment. For example, overeducated workers have lower earnings, participate less often in continuing education and training, and are less satisfied with their jobs. This article changes perspectives by asking whether it is better for the unemployed to take up a job for which they are overeducated or to remain unemployed and continue the search for adequate employment. Theoretically, we rely on the established confrontation of the stepping-stone and trap hypotheses, which make opposing predictions in terms of long-term employment chances and job quality. Using the German Socio-Economic Panel (1984–2012) and applying a dynamic propensity score matching approach, the analyses reveal an interesting trade-off. Although an overeducated re-entry increases the long-term employment chances persistently, it also implies strong lock-in effects into overeducation for up to 5 years after re-employment. In sum, the results support the stepping-stone hypothesis in terms of future employment chances, but also highlight non-negligible risks of remaining trapped in a job that is below one’s level of educational qualification.
Jugendarbeitslosigkeit und Beschäftigungspolitik in der EU
Aus Politik und Zeitgeschichte 65 (4-5), 12-19
Abstract: This paper pursues three objectives. First, it gives overview of the policy measures adopted by the European Union to combat unemployment in general and youth unemployment in particular. It shows that in contrast to general unemployment policy measures tackling youth unemployment are equipped with EU funding. Second, it describes the CUPESSE project and explains how it brings together a range of different disciplines. Third, the paper seeks to familiarize an active labour market programme - Jump Plus - aimed at young unemployed adults in Mannheim, Germany. Due to its success in immediately integrating youth into trainee, internship, and on-the-job learning programmes, the programme has been a role model for other similar approaches across the country.
Hörisch, Felix, Jakob Weber:
Capitalizing the Crisis? Explanatory Factors for the Design of Short-time Work across Organisation for Economic Co-operation and Development Countries
Social Policy & Administration Volume 48, Issue 7, 799-825, DOI: 10.1111/spol.12047
Abstract: This article looks at the financial and economic crisis 2008-10 in 18 Organisation for Economic Co-operation and Development states and seeks to investigate explanatory paths for the subsidization of further education within short-time work programmes. Several hypotheses are put to the test: first, a classical partisan difference argument; second, a varieties of capitalism approach proposing a successful joint rallying of employers and employees for subsidization in coordinated market economies; and, lastly, the merged hypothesis that right-wing parties in a coordinated economic context might subsidize feeling the pressure to overcompensate an 'issue ownership' of left parties in the field of employee-friendly policies. We identify four explanatory paths: coordinated economies in the sample subsidized when they were economically closed or highly indebted. The results also support our combined hypothesis, that New Zealand - a left-governed liberal market economy - and right-governed coordinated market economies of the non-Scandinavian type subsidized.