Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary Is the GATE Programme/Entrepreneurship training a valid response to various forms of market failure (allocative inefficiency in credit, labour, insurance and human capital markets)? Can such a programme have an effect on business sales, earnings or employees? A brief description of the project's goals and its current state Abstract <p>Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees.</p> The full abstract of the study, if available Links https://www.nber.org/system/files/working_papers/w17804/w17804.pdf Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question Is the GATE Programme/Entrepreneurship training a valid response to various forms of market failure (allocative inefficiency in credit, labour, insurance and human capital markets)? Can such a program have an effect on business sales, earnings or employees? Sample Trial population and sample selection Applications were open to any individual interested in starting/growing a business, not limited to those receiving unemployment benefits of welfare. The programme was marketed to potential entrepreneurs via online career centres, brochures, flyers, posters and discussions as well as a dedicated website. Individuals interested had to attend an orientation meeting at one of 21 One Stop Career Centres in 7 GATE cities; anyone who attended was eligible to apply via a 9-page application form with questions on demographics, work/business experience, current business ideas. Applicants were informed that there was not enough room for everyone and lottery would decide who entered the programme randomly. Programme coordinators reviewed applications for completeness and then applied random assignment. GATE was administered in 7 different locations, serving both urban and rural populations in and around Philadelphia, Pittsburgh, Minneapolis, Duluth, Virginia, Portland, Lewiston and Bangor. Number of treatment groups Size of treatment groups 2,094 individuals Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description Treatment group had access to a set of free services geared towards individual needs including a 1-on-1 assessment meeting to determine specific needs. Training was provided by experienced consultants in classroom (introductory, intermediate or advanced levels) or in a 1-to-1 setting that targeted a number of areas. Rounds of data collection Baseline data collection and method Baseline data was collected through the 9-page application form asking for info on demographics, work/business experience, current business ideas. Data collection method and data collected Evaluation Outcome variables <p>Business Ownership: Business ownership, business entry and exit dynamics. Business Scale: Business sales and number of employees, business structure. Earnings: Wage/salary from work or business ownership, other income payments (bonuses, profit distributions, etc), business revenues and employment. Work Satisfaction. Heterogenous Treatment Effects: On those with credit/liquidity restraints; on minorities and females; on those lacking the main human capital factors associated with business success (education, previous managerial experience, previous experience working in a family business); on the unemployed.</p> Results <p>Business Ownership: In the short run (6 months) the average impact of the training was large and significant (13,4% higher than control group). At 18 months, although the treatment effect was still positive, the difference was smaller and no longer statistically significant. At 60 months after treatment, both groups have similar levels of business ownership. Conditional on not owning a business at baseline, treatment members were far more likely to start a business 6 months later. However, these effects disappears over time. Conditional on owning a business at baseline, there was no statistically significant difference in exit rates (although percentages estimates are large and negative). Business Scale No significant effects of treatment on business sales, hiring employees or business structures at any horizon. Earnings No significant effects of training on household income at any horizon. Negative but non-significant point estimates of treatment on business performance. Work Satisfaction No evidence of significant effects of training on work satisfaction. Heterogenous Treatment Effects No evidence that training has positive effects on individuals with credit-constraints, also no effects on investment, debt or loan applications overall. No statistically significant effects of the training on minorities or women. No evidence found that training has lasting or strong effects on those with less education, less previous managerial experience, less experience working in a family business or less prior experience owning a business. Unemployed individuals were more likely to own a business at the 6 month follow-up but there are no effects found in the long-run.</p> Intervention costs Cost per person was estimated at $1,321 per person. Cost benefit ratio Reference Fairlie, Robert W., Dean Karlan, and Jonathan Zinman. 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training." American Economic Journal: Economic Policy, 7 (2): 125-61. Citation for use in academic references
