ERIC ED386572: Self-Employment Programs: A New Reemployment Strategy, Final Report on the UI Self-Employment Demonstration. Unemployment Insurance Occasional Paper 95-4.

256 Pages·1995·5.4 MB·English

by  ERIC

DOCUMENT RESUME
CE 069 815
ED 386 572
And Others
AUTHOR
Benus, Jacob M.
Self-Employment Programs: A New Reemployment
TITLE
Strategy, Final Report on the UI Self-Employment
Demonstration. Unemployment Insurance Occasional
Paper 95-4.
Abt Associates, Inc., Bethesda, MD.
INSTITUTION
Employment and Training Administration (DOL),
SPONS AGENCY
Washington, D.C.
PUB DATE
95
CONTRACT 99-8-0803-98-047-01
257p.; For related reports, see CE 069 813-814.
NOTE
Research/Technical (143)
Reports
PUB TYPE
MFOI/PC11 Plus Postage.
EDRS ?RICE
aess; *Demonstration
Adult Education; Cost Effecti
DESCRIPTORS
Programs; *Employment Programs; Entrepreneurship;
Federal Legislation; Job Development; Job Training;
Program Development; Program Effectiveness; Program
Implementation; Salaries; *Self Employment; Small
Businesses; State Programs; *Unemployment;
Unemployment Insurance; Wages
Massachusetts; *North American Free Trade Agreement;
IDENTIFIERS
Washington
ABSTRACT
The main parameters of state self-employment
assistance (SEA) programs for unemployed workerc were tested in two
experimental demonstrations authorized by the North American Free
Trade Agreement Implementation Act. The Washington State and
Massachusetts Unemployment Insurance (UI) Self-Employment
Demonstrations evaluated the ability of the employment security and
economic development systems to work together and help UI recipients
create their own jobs by starting businesses. The classical
experimental design randomly assigned applicants to either a
treatment or a control group. Design differences between the two-
demonstrations were a requirement in the Massachusetts authorizing
legislation that eliminated those with a low predicted probability of
exhausting UI benefits and eligibility of Washington participants to
receive a lump-sum payment of remaining benefits. The demonstrations
were initiated in six Washington and seven Massachusetts sites.
Relatively few new UI claimants in both states chose to pursue
self-employment when the opportunity arose. Findings from a follow-up
zurvey approximately 31 months after assignment in Massachusetts and
approximately 33 months in Washington, indicated that both
demonstrations increased the likelihood of self-employment, increased
the total time in employment, and reduced the length of unemployment.
Both programs were cost effective from the nonparticipant and
government perspectivt,.. (Appendixes include definitions of
independent variables, sionificant coefficients, and effects on
subgroups.)
(YLB)
Self-Employment Programs:
,A New Reemployment Strategy,
on the U!Self-Employment
*Final Report
Demonstration
Unemployment Insurance
Occastonal Paper 95-4
U.S. Department of Labor
'Employment and Training Administration
U S. DEPARTMENT OF EDUCATION
Olfico of F ducatonal Rosearch and Improven.ont
/
DUCATIONAL RESOURCES INFORMATION
CENTER IERICI
0 TN.., document has been reprr,duord as
ICC.01Vpd from the per tion or or ganitation
originating it
r
0 Minor changes hiwe been made to
anprove reproduchon quality
Points ol wow or oprnions stated in Mr;
document do not necennaill, represent
official ()PRI posdion or policy
BEST COPY AVAILABLE
Material contained in this publication
is in the public domain and may be
reproduced, ully or partially, without
permission of the Federal Government.
Source credit is requested but not
required. Permission is required
only to reproduce any copyrighted
material contained herein.
3
Self-Employment Programs:
A New Reemployment Strategy,
Final Report on the Ut Self-Employment
Demonstration
Unemployment lnsuranct.
Occasional Paper 95-4
U.S. Department of Labor
Robert B. Reich, Secretary
Employment and Training Administration
Doug Ross, Assistant Secretary
Unemployment Insurance Service
Mary Ann Wyrsch, Director
1995
This report was prepared for the
U.S. Department of Labor, Employment
and Training Administration,
Unemployment Insurance Service under
contract number 99-8-0803-98-047-01.
The authors of this report are
Jacob M. Benus, Terry R. Johnson,
Michelle Wood, Nee lima Grover, and
Theodore Shen. Since contractors
conducting research and evaluation
projects under government sponsorship
are encouraged to express their own
judgement freely, this report
does not necessarily represent the
official opinion or policy of the
U.S. Department of Labor.
The UlOP Series presents research
findings and analyses dealing with
unemployment insurance issues. Papers
are prepared by research contractors,
staff members of thv unemployment insurance
system, or individual researchers.
Manuscripts and comments from interested
individuals are welcome. All Correspondence
should be sent to:
Ul Occasional Papers,
Unemployment Insurance Service,
Frances Perkins Building, Room S-4519,
200 Constitution Ave., N.W.
Washington, DC 20210
Attention: Rosalind 1 homas
SELF-EMPLOYMENT PROGRAMS
A NEW REEMPLOYMENT STRATEGY
Final Impact Analysis of
the Washington and Massachussets
Self-Employment Demonstrations
December 1994
Authors:
Jacob M. Benus (Abt Associates)
Terry R. Johnson (Battelle)
Michelle Wood (Abt Associates)
Neelima Grover (Abt Associates)
Theodore Shen (Abt Associates)
Submitted By:
Submitted to:
Abt Associates Inc.
USDOL/ETA/UIS
Hampden Square, 6th Floor
200 Constitution Avenue, NW
4800 Montgomery Lane
Room S-45I9
Bethesda, Maryland 20814
Washington, DC 20210
[phone]
Attention: Jon Messenger
This report was prepared for the U.S. Department of Labor, Employment ard
Training Administration, Unemployment Insurance Service under Contract No.
Since contractors conducting research and development
99-8-0803-98-047-01.
projects are encouraged to state their findings and express their judgments freely,
this report does not necessarily reflect the official opinion or policy of the U.S.
Department of Labor. The contractors are solely responsible for the content of
this report.
ACKNOWLEDGMENTS
The design, implementation, and analysis of the Unemployment Insurance (UI)
Self-Employment Demonstration, which included both the Washington Self-Employment and
Enterprise Development (SEED) Project and the Massachusetts Enterprise Project, required
U.S. Department of Labor (USDOL), the
an extensive collaborative effort among the
of
Washington State Employment Security Department, the Washington State Department
Trade and Economic Development, the Massachusetts Department of Employment and
Training, the Massachusetts Office of Business Development, Abt Associates Inc., and
business
Battelle Memorial Institute, and a number of local organizations that provided
and
assistance services to participants in the two projects. Many individuals from these
and
other organizations have made valuable contributions to the success of the Washington
Massachusetts demonstrations.
who
The authors wish to particularly acknowledge a number of USDOL staff
of
contributed greatly to the success of the project. We particularly appreciate the support
Jon, together with Dr. Stephen Wandner,
Jon Messenger, the USDOL Project Officer.
and
provided guidance and valuable input throughout the research design, implementation,
and John
analysis stages of the project. We also appreciate the assistance of Wayne Gordon
Chang who contributed in a number of areas.
The authors are indebted to staff of the SEED unit of the Washington State
managed
Employment Security Department. The day-to-day operations of the project were
virtually
by Judy Johnson, under the direction of Kathy Countiyman. Judy was involved in
staff,
all aspects of the demonstration program, including the training of demonstration
reviewing applications, implementing random assignment, monitoring program operations
Others in the state that deserve our
and dealing with various automated data systems.
monitoring of
recognition include Davis Garabato, who was actively involved in the
demonstration activities, Eric Jordan who was instrumental in ensuling the quality of the
administrative data used for analysis, and Gary Bodeutsch, who provided information on
state and local area characteristics.
We are also grateful for the assistance of Earl True and Claire Phillips from the
Earl and Claire hired,
Washington Department of Trade and Economic Development.
the provision
trained and monitored the business development specialists and helped ensure
of high-quality business services data.
linger, the
In Massachusetts, we would like to acknowledge the efforts of Bonnie Dal
Project were
Enterprise Project Manager. The day-to-day operations of the Enterprise
and Training
managed by Bonnie, under the supervision of the Department of Employment
design and
'Bonnie was involved throughout the
Nordberg.
Commissioner, Nils
providers,
implementation of the demonstration, including the selection of business training
monitoring all
training local office staff, establishing the application review committee, and
Other members of Bonnie's staff who made valuable
demonstration operations.
Friedman,
contributions were Jean Kluver, Ilene Ladd, Victor Ramirez, Julie Fuller, Leslie
Deb Mapes, and Maureen Fritz.
The success of the demonstration owes much to Jan Leonard and David Sommers
of Battelle. Jan did the bulk of the site monitoring and helped author the interim
teport.
David did an excellent job in performing data analysis tasks. Within Abt,
we would like to
thank Maureen Meagher, who directed the survey data collection, Robert Teitel, who
supervised the survey data file programming, Nee lima Grover and Ted Shen, who
constructed many of the analysis variables and performed
many complex analysis tasks,
David Bell and Elizabeth Moon, who implemented
numerous analysis tasks, and Wendy
Davis, who oversaw the production of this report. We would also like to thank Larry Orr,
a co-principal investigator of the SEED Project, who provided invaluable guidance
throughout the project and made helpful comments which improved this report.
ABSTRACT
The North American Free Trade Agreement (NAFTA) Implementation Act (P.L. 103-
182) authorizes states to establish self-employment assistance (SEA) programs for unemployed
workers. As of the end of 1994, five states (California, Connecticut, Maine, New York and
Rhode Island) have enacted enabling legislation to implement SEA programs for the unemployed.
The main parameters of SEA programs were tested in two experimental demonstrations
sponsored by the U.S. Department of Labor (DOL). The Washington State and Massachusetts
Unemployment Insurance Self-Employment Demonstrations evaluated the ability of the U.S.
employment security and economic development systems to work together and help
Unemployment Insurance (M) recipients create their own jobs by starting businesses.
Preliminary results from these two demonstrations indicated that SEA is a viable reemployment
option for some portion of the unemployed. Moreover, preliminary results suggested that the
Massachusetts model, was likely to be a cost-effective approach for providing SEA to UI
These early results were cited in the decision to authorize SEA for a five-year
claimants.
period.
In this report, we present the fmal impact estimates of the Washington and Massachusetts
These fmal results largely reinforce the earlier
UI Self-Employment Demonstrations.
preliminary fmdings and underscore the conclusion that SEA is a viable policy tool to promote
the rapid reemployment of unemployed workers. The cumulative; evidence from the preliminary
and final evaluations suggests that SEA should be permanently incorporated into the U.S.
employment security and economic development system.
TABLE OF CONTENTS
EXECUTIVE SUMMARY
CHAPTER 1 INTRODUCTION
1
Background of the UI Self-Employment Demonstrations
2
Washington Self-Employment and Enterprise Development (SEED)
Demonstration
3
The Massachusetts UI Self-Employment Demonstration (The Enterprise
Project)
3
Organization of the Report
4
CHAPTER 2 EXPERIMENTAL AND OPERATIONAL DESIGNS
7
Targeting Demonstration Participants
7
Recruiting Participants
9
Application and Random Assignment
10
Business Start-up Services and Financial Assistance
11
Participation Requirements
15
CHAPTER 3 WASHINGTON DEMONSTRATION IMPLEMENTATION
16
Demonstration Intake
16
Business Support Services
23
Financial Assistance
27
CHAPTER 4 MASSACHUSETTS DEMONSTRATION IMPLEMENTATION
30
.
.
Demonstration Intake
30
Participant Characteristics
38
Changes in Program Implementation
38
Participation in Enterprise Project Activities
44
Timing of Enterprise Project Activities
46
Changes in Ul Regulations
46