Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France
© 2020 the American Finance Association We evaluate the effect of downside insurance on self-employment. We exploit a large-scale reform of French unemployment benefits that insured unemployed workers starting businesses. The reform significantly increased firm creation without decreasing the qualit...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
Wiley
2021
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| Online Access: | https://hdl.handle.net/1721.1/136225 |
| _version_ | 1826202636636913664 |
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| author | HOMBERT, JOHAN SCHOAR, ANTOINETTE SRAER, DAVID THESMAR, DAVID |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management HOMBERT, JOHAN SCHOAR, ANTOINETTE SRAER, DAVID THESMAR, DAVID |
| author_sort | HOMBERT, JOHAN |
| collection | MIT |
| description | © 2020 the American Finance Association We evaluate the effect of downside insurance on self-employment. We exploit a large-scale 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. |
| first_indexed | 2024-09-23T12:12:13Z |
| format | Article |
| id | mit-1721.1/136225 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T12:12:13Z |
| publishDate | 2021 |
| publisher | Wiley |
| record_format | dspace |
| spelling | mit-1721.1/1362252024-01-02T18:58:45Z Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France HOMBERT, JOHAN SCHOAR, ANTOINETTE SRAER, DAVID THESMAR, DAVID Sloan School of Management © 2020 the American Finance Association We evaluate the effect of downside insurance on self-employment. We exploit a large-scale 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. 2021-10-27T20:34:20Z 2021-10-27T20:34:20Z 2020 2021-04-09T16:29:08Z Article http://purl.org/eprint/type/JournalArticle https://hdl.handle.net/1721.1/136225 en 10.1111/JOFI.12880 The Journal of Finance Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Wiley SSRN |
| spellingShingle | HOMBERT, JOHAN SCHOAR, ANTOINETTE SRAER, DAVID THESMAR, DAVID Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title | Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title_full | Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title_fullStr | Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title_full_unstemmed | Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title_short | Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France |
| title_sort | can unemployment insurance spur entrepreneurial activity evidence from france |
| url | https://hdl.handle.net/1721.1/136225 |
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