This delivery (D5.2) was written within the project CUPESSE and it contributes to the Work Package 5 (WP05), which aimed to provide an overview of self-employment activity in EU with focus on youth self-employment, and to assess the outcomes of policies on business start-ups and self-employment.
The key findings are as follows:
• Our observation supports the recently published study by Masso (2015) who reports that during the period of years 2002-2012 the overall entrepreneurship rate in the EU countries was at around 14%.
• According to Eurostat (2017), youth self-employment activity in EU was during the last decade relatively stable, at around 6.8%. However, at the same time, we report that the self-employment rates are very country specific.
• To explore in a detail self-employment activity of youths, CUPESSE teams in 10 European countries, namely in the United Kingdom, Germany, Spain, Italy, Denmark, Switzerland, Turkey, the Czech Republic, Hungary and Austria, collected representative country-samples of youths aged 18 to 35 between January and June 2016. Obtained CUPESSE data revealed that the average rate of youth self-employment is 5.8%. On average, 14.3% of youths had formerly any self-employment experience. Collected data also confirmed higher self-employment rates for males (7.2%), compared to females (3.7%). More males (17.5%) compared to females (11.4%) also had previous self-employment experience.
• Self-employment engagement of youths was in our sample dominated (with exception of Turkey) by those, whose legal status of the business was described as a freelancing activity or self-employment (57.8%).
• When it comes to the motivation for joining self-employment, 26.6% of youths are in self-employment due to necessity, contrasted by 62.8%, who pursued independence, desired to be their own boss, wanted to increase their personal income, wanted to realize their dream or those who desired to be perceived as successful. Necessity entrepreneurship is highly represented in southern European countries.
• An empirical regression analysis of young adults´ self-employment engagement and its driving factors revealed that young males have a 2.9 percentage points higher probability of being self-employed, compared to young females. Results also confirmed the positive influence of the readiness to accept risks. Entrepreneurial experience of parents was convincingly confirmed as one of the strongest positive drivers of youth self-employment. Young individuals, who have at least one self-employed parent, have a 10 percentage point higher probability of becoming self-employed, compared to those who do not.
• An overview of entrepreneurship and self-employment policies implemented in EU, in the light of the Entrepreneurship 2020 Action Plan is reported. Policies were classified into several categories and for each of the policy category, examples of good policy practises are attached.
• Three categories of entrepreneurship policies were analysed in detail based on existing research evidence; self-employment policies, financial instruments and high-growth policies. For each category of policies, implemented research designs, variables, methods and control groups together with obtained empirical results are discussed.
• Empirical studies investigating outcomes of policies on self-employment out of unemployment are in agreement about the positive outcomes of the self-employment programmes on the employment status and earnings of the previously unemployed participants in comparison with the control group of unemployed who did not receive start-up subsidies. However, when compared to wage earners, previously unemployed individuals achieve rather inadequate economic outcomes.
• Assigning public support through financial instruments, was identified as a more cost-efficient, compared to the allocation of non-repayable capital grants and subsidies. However, when it comes to obtained findings, it is very difficult to make any clear conclusions, since the empirical evidence is so far very scarce. Despite the fact that there is an economic justification of the programmes facilitating the financial instruments, so far collected empirical evidence is not in the favour of it.
• The main goal of high-growth policies is to support a small group of fast growing firms that are capable to foster new economic activities and to create new job opportunities. Autio and Rannikko (2016) illustrated, on the example of Finnish initiative for young innovative companies (NIY) funded by the National Technology Agency (TEKES), that a carefully designed and well monitored high-growth programme may foster new gazelles and unicorns.
• Based on our investigation, the cornerstone of the evaluation process is the strong cooperation between the research community and public sector institutions. Therefore, national public authorities should support evaluation teams at research institutions that are capable of conducting counterfactual analysis.
• Furthermore, cost-benefit analysis needs to become a part of the evaluation process, informing policy makers and stakeholders about the costs and benefits of the public programmes.
• Assessing separately different groups of supported individuals/companies according to their characteristics would help in the continuous development of knowledge about the outcomes for different groups, which may further lead to better targeting of entrepreneurship policies.
• Coordination of different entrepreneurship and self-employment policies would complementarily bring higher outcomes for supported participants.
• Policy makers should turn their efforts towards an establishment of regional entrepreneurial ecosystems through a reduction of administrative/growth barriers for all firms and through an open access to financial resources.