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  • Publication
    Supporting the Transition from Unemployment to Self-employment - A Comparison of Governmental Support Programs across Europe
    (Edward Elgar, 2014)
    Haas, Melvin
    Governments around the world are facing increasing pressure to reduce unemployment. A deficit of 50 million jobs as compared to the situation before the 2008 financial crisis prevails (ILO 2012). This not only represents a significant amount of unused economic potential but also threatens to undermine the social stability of entire societies through a marginalization of large groups of people from the working population. One mechanism to help reduce unemployment is to support those who want to become self-employed. For this purpose, several active labor market programs (ALMPs) have been developed across Europe, providing support to those seeking to start a business after a period of unemployment. Despite constituting a relatively small portion of national active labor market expenses (1-6% of ALMP spending, OECD 2000) firms established by the previously unemployed make up a large proportion of all new firms as indicated by the 30% in Sweden (Statistics Sweden, 1998), and more than 25% in France (Désiage et al., 2010). The political and economic importance of these programs has led to an increased scholarly attention over the past years (Benus, 1994; Block and Sandner, 2006; Corral, Isusi and Stack, 2006; Bosma, Acs, Autio, Coduras and Levie, 2008; Caliendo and Kritikos, 2009; Block and Wagner, 2010) and it is likely that their political importance will further rise due to ongoing labor market instabilities (ILO, 2012). Despite the enhanced awareness of these programs that have been widely adopted in a number of countries across Europe, most prior research has restricted its scope to analyzing only one specific country, rather than engaging in an international comparative study. A few notable, however outdated, exceptions have employed an internal lens to compare alternative policy schemes and share experiences - both positive and negative - across borders (Staber and Bögenhold, 1993; Meager, 1996; OECD 2000). While some countries have gained considerable knowledge about how to structure their policy initiatives based on experiences from past revisions, other countries have only recently introduced such policy schemes. An international comparative analysis that is able to offer an encompassing yet also detailed overview of existing self-employment support programs could therefore serve as a basis for policymakers trying to improve existing- and implementing new support programs. The purpose of this chapter is to provide an overview and analysis of such policy schemes from several European countries. The selection of countries seeks to reflect the diversity with regards to economic importance, political orientation, history and culture, as well as the variety of program structures that have been implemented. It includes the large economies of France, Germany and Great Britain; their smaller, centrally located neighbors of Austria, Belgium, the Netherlands and Switzerland; the northern, Scandinavian country of Sweden; the eastern European countries of Poland and the Czech Republic; and the southern European countries of Greece and Spain. Similarities and differences between the programs are investigated in order to contribute to increasing their effectiveness (e.g., pointing out suitable policy instruments) and their efficiency (e.g., by employing limited public funds with maximum positive impact). The program structure, the eligibility requirements, the different forms of financial support, as well as the availability of non-financial business support services are presented. Subsequently, a number of differing policy approaches are identified and analyzed in greater detail. The chapter concludes with a discussion of our findings, including suggestions for policymakers and employment agencies that are responsible for the implementation and operation of such programs.