Solo Self-Employed Individuals and Bootstrap Financing in the COVID-19 Crisis

Block, Joern; Fisch, Christian; Hirschmann, Mirko

doi:10.2139/ssrn.3598818

Cited by 7 publications

(10 citation statements)

References 48 publications

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“…These examples show that the decline of selfemployment in response to the pandemic is a global phenomenon. Block et al (2020) investigate how the self-employed cope with the COVID-19 pandemic and maintain their liquidity, particularly through the use of bootstrap financing. They find that this financing instrument is used by many self-employed, and is, amongst others, positively associated with the severity of the crisis for the venture, the level of private consumption, and selfemployment experience.…”

Section: Prior Research On Self-employment During the Covid-19 Pandemicmentioning

confidence: 99%

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Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

Block

Kritikos

Priem³

et al. 2021

SSRN Journal

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The self-employed are among those facing the highest probability of strong income losses during the COVID-19 pandemic. Governments in many countries introduced support programs to support the self-employed, including the German federal government, which approved a €50bn emergency aid program at the end of March 2020 offering one-off lump-sum payments of up to €15,000 to those facing substantial revenue declines. In this contribution, we investigate the impact of this program using a real-time online-survey data with a total of more than 20,000 observations. We employ propensity score matching, making use of a rich set of variables that influence selection into the treatment and the outcome variable, the subjective survival probability. We observe that the emergency aid program had significant effects, with the subjective survival probability of self-employment being moderately increased. We further reveal important effect heterogeneities with respect to education, risk tolerance, and industries. We also observe positive effects only among those whose application was processed within a few days. Lastly, the positive effect on the survival probability is fading out already two weeks after the emergency aid was granted. Our findings have important policy implications for the design of such support programs in the course of this crisis.

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Section: Prior Research On Self-employment During the Covid-19 Pandemicmentioning

confidence: 99%

“…We contribute to the literature around the analysis of the COVID-19 pandemic (Adams-Prassl et al 2020, Block et al 2020, Blundell and Machin 2020, Fairlie 2020) in several ways. This crisis is unique in itself and there is, so far, no experience how public interventions that aim to deal with the economic consequences of the crisis, may help.…”

mentioning

confidence: 99%

Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

Block

Kritikos

Priem³

et al. 2021

SSRN Journal

Self Cite

View full text Add to dashboard Cite

show abstract

“…Shedding light on the antecedents of German's failure reservations becomes even more important in light of the COVID-19 pandemic. The pandemic has caused a worldwide health and economic crisis, putting pressure on entrepreneurial family business (Kraus et al , 2020), innovative start-ups (Kuckertz et al , 2020) and the solo self-employed (Block et al , 2020) and is likely to cause rising failure rates in Germany and around the globe.…”

Section: Introductionmentioning

confidence: 99%

Misperception of entrepreneurship and its consequences for the perception of entrepreneurial failure – the German case

Kuckertz

Berger

Prochotta

2020

IJEBR

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PurposeThis study aims to investigate how Germans' misperceptions of the nature of entrepreneurship influence their attitudes towards entrepreneurial failure.Design/methodology/approachAdopting a multivariate regression analysis, the study used data collected from a commercial online market research panel (N = 2,027) reflecting the overall German working population. Attitudinal items on business failure were used to measure the study variables. The study controlled for age, education, employment status, gender, income, whether the respondent knows a failed entrepreneur and the German federal state in which the respondent resides.FindingsThe findings suggest that reservations about failed entrepreneurs become stronger as misperceptions of the nature of entrepreneurship worsen. The results also show that failure reservations vary regionally over the 16 German federal states.Practical implicationsNationwide efforts regarding the stimulation of entrepreneurship and the acceptance of entrepreneurial failure are insufficient for removing failure reservations, as they neglect regional cultural differences. The results suggest that it is not enough just to invest in efforts to create a failure-friendly culture, and that a better general education about the realities of entrepreneurship is a prerequisite.Originality/valueThe study generates insights into how the overall population in an innovation-driven economy perceives entrepreneurship and entrepreneurial failure. Moreover, the work delves into the reasons why parts of German society reject failed entrepreneurs. Hence, this study can aid the drafting of effective policy initiatives at the regional and national levels.

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“…Future research may also focus on examining other measures of performance (e.g., survival or employment growth), and other (non-European) countries. Finally, future studies should also investigate to what extent performance differences between different entrepreneurship types are reinforced or attenuated by the current Covid-19 crisis, and how different types of entrepreneurs cope with the challenge of maintaining their liquidity during the crisis (Block et al, 2020).…”

Section: Discussionmentioning

confidence: 99%

Measuring performance differentials across entrepreneurship types

et al. 2021

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It is increasingly being recognized that different types of entrepreneurs exist with different performance levels and different contributions to the economy. Two common classifications of entrepreneurship types are based on professional status and start-up motive, where independent own-account workers are assumed to perform better than dependent self-employed and opportunity entrepreneurs are assumed to perform better than necessity entrepreneurs. However, these supposed performance differentials are seldomly tested or quantified. Using recent data drawn from the European Working Conditions Survey for the EU-28, we explore self-employment earnings (as an indicator of performance) across these different entrepreneurship types. Our results from OLS and multilevel linear regressions show that dependent self-employed workers are indeed observed to have significantly lower earnings than independent own-account workers, but the difference is only 10%, suggesting that the precarious nature of the dependent self-employed may be overstated in certain policy circles. Regarding start-up motive, our paper highlights the importance of distinguishing the group of entrepreneurs who simultaneously have both opportunity and necessity motives to start a business.

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Solo Self-Employed Individuals and Bootstrap Financing in the COVID-19 Crisis

Cited by 7 publications

References 48 publications

Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

Misperception of entrepreneurship and its consequences for the perception of entrepreneurial failure – the German case

Measuring performance differentials across entrepreneurship types

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