Journal of Labor Economics Vol. 44 No. 1 2026
From Unemployment to Self-Employment: An Evaluation of Self-Employment Assistance Programs
Abstract
This paper evaluates self-employment assistance (SEA) programs, which are government initiatives extending the unemployment insurance system to support unemployment to self-employment transitions. Using a general equilibrium model of the US labor market, we show that these programs have important labor market mobility effects and increase the self-employment rate. They also significantly impact the composition and performance outcomes of self-employment: while lump-sum subsidies select low-skilled individuals, SEA programs contingent on previously employed earnings select skilled and wealthier individuals. At the aggregate level, the latter programs mainly reallocate individuals from employment to self-employment, leaving the unemployment rate largely unaffected.
- DOI
- 10.1086/732765
- Volume
- 44
- Issue
- 1
- Pages
- 309-349
- Language
- en
- Sources
- openalex crossref