Whitman School of Management at Syracuse University
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Abstract Details

Turning the Unemployed into Entrepreneurs: An Evaluation of a Self-Employment Department of a Transitional Economy
Vol. Volume 3, Number 1 June/1998

Milan Vodopivec

Milan Vodopivec is Professor of Entrepreneurship and Dean of the Business School at GEA College of Entrepreneurship in Portoroz, Slovenia.

The paper evaluates the performance of a Slovenian Capitalization Program, the program that assists the unemployed to start self-employment by providing them a subsidy in lieu of unemployment compensation. The results indicate that the participants of the program are not as successful as independent entrepreneurs. After three years from starting business, 36 percent of program participants failed, compared to 17 percent failure among independent entrepreneurs. Other results suggest possible improvements to the program, both regarding the selection and business practices of participants. In the area of program selection, we find that more mature participants, those with vocational school training, and those who own assets at the start of the business are more likely to survive. In the area of business practices, we find that training in core skills, i.e. those essential to the production process, is more helpful to the self-employed than training in auxiliary skills like accounting and marketing.

Keywords: self-employment, unemployment, entrepreneurship, employment programs