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Evaluation of the Spanish flat rate for young self-employed workers

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Abstract

The dramatic growth of unemployment figures in Spain during the economic downturn has increased policies fostering entrepreneurship, particularly among the youth. The aim of this paper is to evaluate the impact of a Spanish programme fostering self-employment among unemployed youth workers. We use an administrative dataset (the Continuous Working Lives Sample) to study the survival of subsidized start-ups compared to those not subsidized. Using a differences-in-differences approach, our results suggest that the programme has no effect in terms of survival rates.

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Notes

  1. See (ILO 2014) for a summary of Spanish labour reforms in recent years.

  2. Expenditures in ALMP decreased 8.2% during the same period.

  3. See http://www.empleo.gob.es/es/garantiajuvenil/informate.html.

  4. Royal Decree-Law 4/2013, of February 22, of measures to support entrepreneurship and to foster growth and job creation (BOE, February 23, 2013).

  5. The quota amounts were €884.40 in 2013, €875.70 in 2014, and €858.60 in 2015.

  6. During the first 15 months, the subsidy is a reduction in the contribution (which is paid by Social Security), while during the following 15 months, it is a bonus (which is paid by the PES).

  7. http://prensa.empleo.gob.es/WebPrensa/noticias/ministro/detalle/2007

  8. This feature distinguishes this programme from those in other European countries. The revised programmes in section 1 have these types of requirements that concern training or demonstrating business viability.

  9. Unfortunately, the Ministry of Employment and Social Security does not provide data with further disaggregation by age groups. Thus, it is not possible to obtain the data for the target group of the start-up programme, namely, men under 30 years of age and women under 35 years of age.

  10. According to figures from the Ministry of Employment and Social Security, the number of beneficiaries was almost 50,000 on July 27. Our sample estimates are 55,000 from March to the end of July, considering that the raising factor of our dataset is 25.

  11. Unfortunately, there is no information regarding the number of employees of the businesses.

  12. We perform a placebo test using data for the previous year (2012), and the hypothetical treatment is not statistically significant, which confirms the fulfilment of the parallel trend assumption. These results are shown in Table 5 in the Annex.

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Acknowledgements

The authors gratefully acknowledge the financial support of the Ministry of Economy and Competitiveness: Project ECO2013-41022-R, Project ECO2013-43925-R and Project ECO2016-75805-R. Authors would also like to thank anonymous referees for valuable comments.

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Authors and Affiliations

  1. Department of Applied Economics, University of Oviedo, Oviedo, Spain

    Begoña Cueto & Matías Mayor

  2. Department of Economics, University of Oviedo, Oviedo, Spain

    Patricia Suárez

Authors
  1. Begoña Cueto
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  2. Matías Mayor
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  3. Patricia Suárez
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Correspondence to Begoña Cueto.

Appendix

Appendix

Table 5 Placebo test. Estimation for 2012
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Cueto, B., Mayor, M. & Suárez, P. Evaluation of the Spanish flat rate for young self-employed workers. Small Bus Econ 49, 937–951 (2017). https://doi.org/10.1007/s11187-017-9853-y

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