A Measure That Really Works? Impact Evaluation of the Contribution for Self-Employment as a Tool of Active Labour Market Policy in Slovakia

Abstract

Unemployment presents a significant challenge requiring attention not only in developing countries but also in economically developed ones. Active labour market policies offer a potential solution to address this issue. This study focuses on assessing the impact of the intervention called Contribution for Self-employment provided under the Act on Employment Services No. 5/2004 Coll in the Slovak Republic. This financial support is extended voluntarily to unemployed individuals seeking jobs and aims to partially defray the expenses associated with launching business ventures. The primary objective of this research is to quantify the effectiveness of the Contribution for Self-employment in enhancing the employment of its recipients, thereby gauging its efficacy in reducing unemployment. The evaluation employs a counterfactual impact assessment methodology, utilising propensity score matching for analysis, with propensity score estimated by the logistic regression. Data from the registry of jobseekers maintained by the Central Labour Office of Social Affairs and Family in Slovakia are utilised in this analysis. This study’s findings indicate a favourable impact of the contribution on the employment of its participants compared to the comparable non-participants. Consequently, this intervention emerges as a viable mechanism for supporting entrepreneurship and mitigating unemployment in Slovakia.