Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France
Name
SSRN-id2329357.pdf
Description
Submitted version
Size
1.07 MB
Format
Adobe PDF
Checksum (MD5)
974617933b509d6916f3041c88c589d8
Author(s)
HOMBERT, JOHAN
SCHOAR, ANTOINETTE
SRAER, DAVID
THESMAR, DAVID
Date Issued
2020
Journal
The Journal of Finance
Publisher
Wiley
Version
Original manuscript
Abstract
© 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.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/JOFI.12880
