Small businesses occupy an important place in both American thought and the US economy. Owing to this importance, policymakers have established programs to help unemployed individuals and others interested in self-employment better understand all aspects of starting and operating a new business. While there is great interest in these programs, there is little evidence on whether they effectively promote successful self-employment.
Using data from Project GATE, Jacob Benus and Marios Michaelides published an article examining the efficacy of these self-employment programs. Their experimental design included a random sample of individuals who were very interested in self-employment and offered them self-employment training services. Researchers found that Project GATE effectively aided unemployed participants in starting their own business and becoming self-employed soon after they were randomly assigned. Results indicate that many of the new businesses begun by unemployed participants were sustained for long periods of time. There was no evidence that Project GATE had a significant impact on total earnings. Though the average total earnings of unemployed participants 5 years after the program were similar to the US average, indicating that participants achieved self-sufficiency.
Researchers found no evidence that Project GATE aided non-unemployed participants in the same significant ways it helped the unemployed: results show no impact on new business starts, self-employment, salary employment, total employment, or total earnings. This study shows that while self-employment training is beneficial for unemployed individuals who are interested in self-employment, it may not be effective in improving labor market outcomes for other groups of individuals who are not unemployed.