From unemployed to self-employed: using an intention-to-treat approach

This paper evaluates the effectiveness of a program which aims to activate welfare recipients to become self-employed. Unique administrative data is used which contains applicants for the self-employment program between 2007 and 2010. The long-term effects on welfare recipience, employment and income up until 8 years after applying to the program are examined by using a matching technique. This paper distinguishes itself from earlier research by investigating the effect of applying to the program instead of joining it. Using this so-called intention-to-treat approach, the selection bias decreases. Furthermore, light is shed on the efficiency of the self-employment policy by performing a cost-benefit analysis. The results show that the self-employment program is an effective and efficient approach to integrate welfare recipients into the labour market.