Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France

We evaluate the effect of downside insurance on self-employment. We exploit a largescale reform of French unemployment benefits that insured unemployed workers starting businesses. The reform significantly increased firm creation without decreasing the quality of new entrants. Firms started postrefo...

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Veröffentlicht in:	The Journal of finance (New York) 2020-06, Vol.75 (3), p.1247-1285
Hauptverfasser:	HOMBERT, JOHAN, SCHOAR, ANTOINETTE, SRAER, DAVID, THESMAR, DAVID
Format:	Artikel
Sprache:	eng
Schlagworte:	Employment Entrepreneurs Productivity Unemployed people Unemployment insurance
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description	We evaluate the effect of downside insurance on self-employment. We exploit a largescale reform of French unemployment benefits that insured unemployed workers starting businesses. The reform significantly increased firm creation without decreasing the quality of new entrants. Firms started postreform were initially smaller, but their employment growth, productivity, and survival rates are similar to those prereform. New entrepreneurs' characteristics and expectations are also similar. Finally, jobs created by new entrants crowd out employment in incumbent firms almost one-for-one, but have a higher productivity than incumbents. These results highlight the benefits of encouraging experimentation by lowering barriers to entry.
doi_str_mv	10.1111/jofi.12880
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source	Wiley Online Library Journals Frontfile Complete; Jstor Complete Legacy
subjects	Employment Entrepreneurs Productivity Unemployed people Unemployment insurance
title	Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France
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