Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Non technical summaryIn times of persistently high unemployment, labour market policy measures become increasingly important. Apart from traditional programmes such as continuous vocational training or re-education, the transition into self-employment is promoted in many industrialised countries. The aim is to shift people out of the unemployment status and to reduce the level of unemployment. In Germany, the transition from unemployment to self-employment is supported by the Federal Employment Services by so-called bridging allowances. Since August 1994, the conditions for receiving allowances were considerably eased, which led to a sharp increase in the number of people subsidised. In 1996, the transition of 90,000 unemployed people into self-employment was supported, compared to 25,000 in 1993.A discussion of expected costs and benefits of self-employment gives reason to assume that the threshold of expected income at which a decision in favour of selfemployment is made is lower for unemployed people. Opp'ortunity costs of business formation by unemployed persons probably lie below those of an employed person with the same endowment of human and financial capital, while the sunk costs might be higher, depending on unemployment duration and expected labour demand. It can be expected that business start-ups by unemployed people are smaller, require less capital, are more risky and tend to occur in industries with lower market entry costs. However, not much is known about firm development. This study compares firm survival and employment growth of start-ups by unemployed persons in East and West Germany as promoted by the Work Support Act with start-ups by non-unemployed. The empirical analysis is based on a sample of newly founded firms from the ZEW Firm Start-up Panel. The sample contains firms which were founded between 1993 and 1995 and could be observed at least one year after their foundation in 4 regions of East and 11 regions of West Germany. In the econometric analysis, self-selection effects are taken into account by using simultaneous models of start-up promotion and firm development. While firm survival seems to be negatively affected by foundation from unemployment, especially in the East German regions, an influence on employment growth is not evident. The results of the econometric analyses indicate that selectivity effects indeed seem to have some influence on firm survival, although not on employment growth. St...

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This study applies a full information maximum likelihood (FIML) estimator of the sample selection model with bivariate selection rule for the investigation of the impact of subsidised firm foundation from unemployment on employment growth of the firm. The empirical analysis is based on the ZEW Firm Start-up Panel using a cohort of firms founded in 15 labour market districts during 1993 and 1995. Estimation results show that the use of the FIML estimator is clearly warranted, compared to a two-step estimator. The FIML model yields a significant negative impact of bridging allowance on employment growth, whereas the two-step estimator underestimates the impact. JEL-Classification: C35, D92, J68 Acknowledgement I thank François Laisney and Friedhelm Pfeiffer for valuable comments. Part of the work was financially supported by the European Social Fund.