Liquidity, Risk, and Occupational Choices

Bianchi, Milo; Bobba, Matteo

doi:10.1093/restud/rds031

Cited by 104 publications

(56 citation statements)

References 32 publications

(30 reference statements)

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“…The subsidy is expected to compensate for these disadvantages. Moreover, in a recent study Bianchi and Bobba (2013) show that insurance (instead of credit) constraints are mostly binding for nascent entrepreneurs, i.e., the (financial) risk of failure hinders nascent entrepreneurs. In this sense, the subsidy can be considered as an insurance against the risk of low or no income during the start-up period stimulating nascent entrepreneurs among the unemployed to start a business.…”

Section: Economic Considerationsmentioning

confidence: 99%

Subsidized start-ups out of unemployment: a comparison to regular business start-ups

et al. 2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Offering unemployed individuals a subsidy to become self-employed is a widespread active labor market policy strategy. Previous studies have illustrated its high effectiveness to help participants escaping unemployment and improving their labor market prospects compared to other unemployed individuals. However, the examination of start-up subsidies from a business perspective has only received little attention to date. Using a new dataset based on a survey allows us to compare subsidized start-ups out of unemployment with regular business founders, with respect to not only personal characteristics but also business outcomes. The results indicate that previously unemployed entrepreneurs face disadvantages in variables correlated with entrepreneurial ability and access to capital. 19 months after start-up, the subsidized businesses experience higher survival, but lag behind regular business founders in terms of income, business growth and innovation. Moreover, we show that expected deadweight losses related to start-up subsidies occur on a (much) lower scale than usually assumed.JEL Classification: C14, L26, J68

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Section: Economic Considerationsmentioning

confidence: 99%

Subsidized start-ups out of unemployment: a comparison to regular business start-ups

et al. 2015

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“…Alternately, programs can try to provide crude insurance. It is possible that regular cash transfers would stimulate enterprise development more than the one-time transfer we study (Bianchi and Bobba 2013;Karlan, Knight, and Udry 2015).…”

mentioning

confidence: 99%

Reducing Crime and Violence: Experimental Evidence from Cognitive Behavioral Therapy in Liberia

Blattman

Jamison²,

Sheridan³

2017

American Economic Review

258

134

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“…Bianchi and Bobba (2012) find that participation in Oportunidades increases the likelihood of entering entrepreneurship and that the effect is more tightly linked to the promise of future transfers than to received transfers. Bianchi and Bobba argue that the cash transfers provide a buffer against future income shocks, inducing greater risk taking among participants.…”

Section: Background Cash Transfersmentioning

confidence: 90%

Index Insurance and Cash Transfers: A Comparative Analysis from Northern Kenya

2014

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Cash transfers and index insurance have become popular interventions by development agencies worldwide. But they operate in radically different ways. In principle, these could offer complementary or substitute means of improving households' well-being, both through direct payments and through induced behavioral change. Surprisingly, little is known about these programs' comparative impacts on participant behavior or well-being, nor about their prospective interactions. This paper exploits four years of household panel data from northern Kenya, where the government launched a Hunger Safety Net Program (HSNP) offering cash transfers just prior to the commercial launch of an index-based livestock insurance (IBLI) product. By exploiting the known selection mechanism behind HSNP participation and the randomization of IBLI extension education and premium discounts, we are able to make novel comparisons of the causal impacts of each type of program among the same population at the same time, which spans a catastrophic drought. We find that both programs benefit participants, but there is no evidence of positive synergies between the two programs. HSNP participation increases the likelihood that a household maintains mobility, an important pastoral production strategy, and improves child health, as indicated by a mid-upper arm circumference (MUAC). IBLI coverage increases expenditures on livestock health services, milk production, MUAC, and income per adult equivalent. Standardizing the estimated benefits by total program costs reveals that the two programs perform comparably, while from a marginal cost perspective the IBLI program has impacts per unit of expenditure at least an order of magnitude greater than HSNP.JEL CODES: D60, I38, O00

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Liquidity, Risk, and Occupational Choices

Cited by 104 publications

References 32 publications

Subsidized start-ups out of unemployment: a comparison to regular business start-ups

Subsidized start-ups out of unemployment: a comparison to regular business start-ups

Reducing Crime and Violence: Experimental Evidence from Cognitive Behavioral Therapy in Liberia

Index Insurance and Cash Transfers: A Comparative Analysis from Northern Kenya

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