Self-Employment Programs: A New Reemployment Strategy, Final Report on the UI Self-Employment Demonstration. Unemployment Insurance Occasional Paper 95-4.

N

257

Employment and Training Administration (DOL), Washington, DC.

Adult Education; Cost Effectiveness; Demonstration Programs; Employment Programs; Entrepreneurship; Federal Legislation; Job Development; Job Training; Program Development; Program Effectiveness; Program Implementation; Salaries; Self Employment; Small Businesses; State Programs; Unemployment; Unemployment Insurance; Wages

Massachusetts; Washington

The main parameters of state self-employment assistance (SEA) programs for unemployed workers were tested in two experimental demonstrations authorized by the North American Free Trade Agreement Implementation Act. The Washington State and Massachusetts Unemployment Insurance (UI) Self-Employment Demonstrations evaluated the ability of the employment security and economic development systems to work together and help UI recipients create their own jobs by starting businesses. The classical experimental design randomly assigned applicants to either a treatment or a control group. Design differences between the two demonstrations were a requirement in the Massachusetts authorizing legislation that eliminated those with a low predicted probability of exhausting UI benefits and eligibility of Washington participants to receive a lump-sum payment of remaining benefits. The demonstrations were initiated in six Washington and seven Massachusetts sites. Relatively few new UI claimants in both states chose to pursue self-employment when the opportunity arose. Findings from a follow-up survey approximately 31 months after assignment in Massachusetts and approximately 33 months in Washington, indicated that both demonstrations increased the likelihood of self-employment, increased the total time in employment, and reduced the length of unemployment. Both programs were cost effective from the nonparticipant and government perspectives. (Appendixes include definitions of independent variables, significant coefficients, and effects on subgroups.) (YLB)

1996

ED386572