Abstract

Subsidizing start-ups out of unemployment has been an integral part of German active labor market policy (ALMP) for many decades. The latest reform of the current subsidy at the end of 2011 has changed the program drastically: The policy change could have opposing effects: On the one hand, the program has become less attractive, as it provides less financial assistance, and receiving it has become harder, due to the additional selection at the level of the  mployment agencies.

On the other hand, caseworkers might choose to grant the subsidy especially to individuals who are less prone (or able) to start their own business and thus are more in need of the subsidy. The overall of the reform is ambiguous. Thus, a new assessment of the effectiveness of the program is necessary.