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One-way ticket from unemployment to entrepreneurship? Evaluation of allowance for self-employment in least developed regions

Ján Huňady
Ján Huňady
, 
Miroslav Šipikal
Miroslav Šipikal
, 
Peter Pisár
Peter Pisár
 and 
Vladimír Hiadlovský
Vladimír Hiadlovský
   | Dec 10, 2022
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Published Online: Dec 10, 2022
Page range: 1 - 17
Received: Aug 20, 2022
Accepted: Oct 27, 2022
DOI: https://doi.org/10.2478/cejpp-2022-0009
Keywords
© 2022 Ján Huňady et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.

Fig. 1

The proportion of employed and self-employed in the more developed and less-developed sub-regions after the end of support
The proportion of employed and self-employed in the more developed and less-developed sub-regions after the end of support

Analysis of the selected factors affecting the employment and self-employment of supported people 1 and 2 years after the end of support (probit regression)

Dependent variables Employed (total) (yes = 1, no = 0) Employed (without self-employed) Self-employed (yes = 1, no = 0)
1 year after the end of support 1 year after the end of support 2 years after the end of support 1 year after the end of support 2 years after the end of support
Coef. (z-stat.) dy/dx Coef. (z-stat.) dy/dx Coef. (z-stat.) dy/dx Coef. (z-stat.) dy/dx Coef. (z-stat.) dy/dx
Gender (male = 1) 0.248*** (3.05) 0.049 0.266*** (2.71) 0.082 0.191* (1.91) 0.054 0.116* (1.79) 0.047 0.251*** (3.57) 0.096
Married −0.224** (−2.48) −0.044 −0.309*** (−3.03) −0.095 −0.226** (−2.17) −0.065 0.038 (0.55) 0.085 (1.12)
Age 0.067** (2.02) 0.006 −0.034 (−0.63) −0.005 (−0.83) 0.002 (0.46) 0.107*** (3.74) 0.041
Age2 −0.0009** (−2.08) − −0.001*** (−3.63)
Amount of support (in EUR) −0.0005 (−0.69) −0.0001 (−1.70) −0.001 (−1.00) 0.0002*** (−3.28) 0.00007 0.0002*** (2.82) 0.00006
Unemployment length (in days) −0.0002*** (−5.04) −0.00004 −0.0002*** (−4.51) −0.00007 −0.0002*** (−4.63) −0.0001 −0.0001* (−1.89) −0.00003 −0.0002*** (−3.83) −0.0001
Length of support (in years)t 0.067*** (3.74) 0.0002 0.001**** (3.01) 0.0003 0.001*** (2.87) 0.0003 0.001*** (4.32) 0.0004 0.001*** (4.06) 0.0004
Year of support (start of the support) 0.067 (1.27) 0.111* (1.88) 0.034 0.128* (1.86) 0.036 −0.034 (−0.91) −0.092* (−1.72) −0.036
Education (coded from 1-lowest to 7-highest) 0.132*** (4.40) 0.025 0.207*** (6.00) 0.0629 0.135*** (3.9) 0.038 −0.053** (−2.55) −0.022 −0.056** (−2.48) −0.021
Previously worked in primary sector (NACE 1 and 2) −0.341 (−1.73) −0.19 (−0.80) 0.102 (0.39) −0.272 (−1.46) −0.167 (−0.89)
Previously worked in industry (NACE 3) 0.219 (1.63) 0.369** (2.34) 0.1 0.065 (0.42) −0.029 (−0.31) −0.021 (−0.21)
Same place (work and home) 0.113 (0.87) 0.186 (1.20) 0.049 (0.32) 0.064 (0.60) 0.135 (1.18)
Less-developed sub-regions −0.077 (−0.87) −0.005 (−0.05) −0.15** (−1.39) −0.038 −0.164** (−2.35) −0.064 −0.217*** (−2.84) −0.082
Cons. −132.65 (−1.29) −222.80* (−1.88) −257.4** (−1.86) 67.51 (0.90) 181.5* (1.68)
Observations 1683 896 894 1683 1484
Wald chi2 140.5 131.62 97.5 61.73 73.60
Pseudo R2 0.106 0.143 0.11 0.026 0.043

Characteristics of supported job seekers based on selected variables

All sub-regions Less developed More developed
Mean Std. dev. Min. Max. Mean Mean
Age (years) 34.8 9.9 18 61 34.73 34.86
Total length of unemployment (days) 1036.4 973.5 103 7305 943.7 1216.7
Sum of support (EUR) 3971.1 606.8 1899 4645 3856.1 4186.9

Description of variables used in the regression analysis

Variables Description of variables
Employed 1 year after Follow-up 1 year after the end of support:coded 1 if employed in any job (also self-employed), otherwise as 0
Employed 2 years after Follow-up 2 years after the end of support:coded 1 if employed in any job (also self-employed), otherwise as 0
Self-employed 1 year after Follow-up 1 year after the end of support:coded 1 if self-employed, otherwise coded as 0
Self-employed 2 years after Follow-up 2 years after the end of support:coded 1 if self-employed, otherwise coded as 0
Independent variables
Gender (male) Gender of the beneficiary: coded 1 if male, otherwise 0
Age Age of the beneficiary (years)
Age2 Squared value of age (years)
Married Marital status: coded 1 if married, otherwise 0
Unemployment length Total length of previous unemployment (days)
Education Achieved education: ordinal variable from 0 to 8 (without formal education = 0, primary education = 1, lower vocational education = 2, secondary vocational education = 3, completed secondary education = 4, higher vocational education = 5, bachelor's degree = 6, master's degree = 7, PhD degree = 8)
Tertiary education Coded 1 if achieved bachelor's, master's degree or PhD (6–8), otherwise 0
Primary education or lower vocational education Coded 1 if the highest achieved education is primary or lower vocational education (1–2), otherwise 0 (people without education excluded)
Primary sector (based on NACE 1 and 2) The sector in which the beneficiary was active before unemployment. Based on the Statistical Classification of Economic Activities in the European Community, coded 1 if the Statistical classification of economic activities (NACE) code is 1 (agriculture, forestry and fishing) or 2 (mining and quarrying), otherwise 0
Industry The sector in which the beneficiary was active before unemployment. Based on the Statistical Classification of Economic Activities in the European Community, coded 1 if the NACE code is 3, otherwise 0
Less-developed sub-regions Less-developed sub-regions (according to the Slovak government) coded 1, otherwise coded as 0 (more developed sub-regions)
Same place Same place of work and living. Coded 1 if the individual is living in the same city or village where his/her job is located, otherwise 0
Amount of financial support Total amount of financial support from the self-employment support allocated to the beneficiary (in EUR)
Length of support The length of the period during which the beneficiary is supported and that is also mandatory to carry out self-employment business (in years)
Year of support Order of the year when the support started to take place during the selected period (year 2012 = 1, year 2013 = 2, year 2014 = 3, …, year 2017 = 6)

Comparison of survival of supported business and maintenance of employment for selected groups

Status Sub-regions Men in construction sector (%) Men in whole sample (%)
Employed More developed 83.81 89.80
Less developed 73.81 85.51
Self-employed More developed 51.43 46.52
Less developed 59.52 38.07

Status of supported people classified by selected characteristics 2 years after the end of support

Sub-region type Men (%) Women (%) Married men (%) Married women (%) Men with tertiary education (%) Women with tertiary education (%) Women with vocational education or lower (%)
Employed More developed 89.8 85.3 87.9 85.5 95.3 86.7 77.8
Less developed 85.5 74.8 83.6 71.1 90.4 96.5 55.8
Self-employed More developed 46.5 35 48.3 37.2 36.7 31.1 34.9
Less developed 38.1 29.2 45.9 31.3 28.7 42.1 19.2

Characteristics of supported unemployed people – selected variables

Unemployed people supported by the scheme Full sample of unemployed people Self-employed in sub-region (2015) Inhabitants of sub-region (2015)
Men 59.13% 51.96% 69.2% 48.40%
Women 40.84% 48.02% 30.8% 51.52%
Single 46.26% 52.78% 44.03%
Married 44.02% 34.31% 37.27%
Average age (years) 34.8 35.73 43.8 40.82

The status of supported people classified by educational level 2 years after the end of support

Educational level
Sub-region type Elementary Secondary vocational Secondary Higher vocational Bachelor's Master's PhD/doctoral Together
Employed More developed 85.2% 82.5% 89.5% 57.1% 71.4% 93% 85.7% 88%
Less developed 61.5% 70.5% 81.8% 50% 71.4% 93.7% 100% 81.3%
Self-employed More developed 40.7% 47.4% 44.3% 14.3% 14.3% 36.2% 14.3% 41.9%
Less developed 23.1% 34.4% 36.7% 0% 14.3% 35% 0% 34.7%

The results of bivariate probit regression (1 year after support)

More developed sub-regions Less-developed sub-regions
Dependent variables Employed 1 year after the end of support Self-employed 1 year after the end of support Employed 1 year after the end of support Self-employed 1 year after the end of support
Coef. Coef. Coef. Coef.
Gender (male = 1/female = 0) 0.042 0.108 0.400** 0.231*
Gender × tertiary education (interaction term) 0.447* 0.11 0.127 −0.741***
Tertiary education 0.093 −0.336*** 0.438* 0.439**
Married −0.16 −0.065 −0.143 0.242**
Age −0.002 0.002 −0.003 0.002
Amount of financial support (EUR) −0.0001 0.0001** −0.0003 0.0005***
Unemployment length (days) −0.0003** −0.0001 −0.0002*** −0.0001
Length of support (years) 0.001*** 0.001*** 0.002*** 0.0006
Year of support 0.098* −0.0072* −0.075 0.033
Previously worked in primary sector (NACE 1 and 2) −0.238 −0.219 −0.389 −0.333
Previously worked in industry (NACE 3) 0.162 −0.107 0.301 0.057
Cons. −196.3* 143.09 −151.90 −69.57
Number of observations 1137 552
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