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Starting Business Out of Unemployment: How Do Supported Self-employed Individuals Perform?

  • Ondřej Dvouletý ORCID logo EMAIL logo
Published/Copyright: January 7, 2022

Abstract

The study empirically contributes to the discussion on the effects of start-up subsidies for unemployed individuals as a part of the active labour market policy. The article provides insights into the survival and performance of the subsidized businesses in the Czech Republic. The study follows up cohorts of self-employed individuals that were supported during years 2009–2017. The obtained findings show that a vast majority of the supported businesses were still officially active 2 years after the allocation of the start-up subsidy, and even later. The firm-level data further relieve that most of the individuals starting a business out of unemployment stay solo (only less than four per cent of self-employed individuals employ besides themselves at least one employee) and the economic outcomes of the subsidized businesses, measured as annual turnover, are rather modest. The empirical results further showed that higher intensity of public support is negatively associated with business closure and positively with employment and turnover categories. The study concludes that the start-up subsidy for unemployed succeeded in activating unemployed individuals to pursue an economic activity, although further research concerning other outcome variables such as personal income, job satisfaction and well-being is needed.

JEL Classification: H81; J68; L26; L53

Corresponding author: Ondřej Dvouletý, Department of Entrepreneurship, University of Economics, Prague, W. Churchill Sq. 1938/4, Prague 3, 13067, Czech Republic, E-mail:

Funding source: Internal Grant Agency of Faculty of Business Administration, University of Economics in Prague

Award Identifier / Grant number: IP300040

Acknowledgment

The author is grateful for the comments of both reviewers and the associate editor Michael Mustafa. This work was supported by Internal Grant Agency of Faculty of Business Administration, University of Economics, Prague, under no.: IP300040.

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Received: 2019-11-08
Accepted: 2020-04-29
Published Online: 2022-01-07

© 2020 Walter de Gruyter GmbH, Berlin/Boston

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