You can go your own way! The long‐term effectiveness of a self‐employment programme for welfare recipients in Germany

In this study, we examined the long‐term effects of supporting welfare recipients by means of a subsidy to start their own business. We used administrative data and propensity score matching to estimate the impact of the subsidy on the probability of receiving welfare benefits and on unemployment status up to 72 months after programme start. We supplemented our estimation results with the results of a qualitative survey which provided insights into the diversity of entrepreneurial activities and the recipients' motivation for starting a business. Our results are encouraging. We found a stable positive effect on the outcomes of interest. We further found that foreign nationals and the long‐term unemployed benefit the most. We conclude that the subsidy allows some people to successfully start a business who would not have otherwise done so and who would have been less successful by choosing the alternative of continued job search.