The impact of entrepreneruship training on graduate unemployed : evidence from a randomized field experiment

Abstract

Context, Objectives and Entrepreneurship Intervention In the context of labour market issues, unemployment rates constitute, undoubtedly a major concern, especially under an economic and financial crisis situation, such as the currently faced by many European countries, since 2008. Unemployment rates are an important structural indicator, displaying both economic and social dimensions. An increase of unemployment might imply a loss of talent and unique human capital out of the labour force, culminating in social exclusion, disintegration and substantial raise of government expenditures (social benefits and ALMPs). Nowadays, stimulating entrepreneurship through active labour market policies is widely recognized as manner of combating unemployment and improving innovation and job creation. The primary role of the present research is to infer whether a entrepreneurship training contributes to employment, full-employment and self-employment rates of targeted individuals. Therefore, it includes the measurement of 4 main groups of outcomes: 1). Networking and job's offers applications; 2). Employment, self-employment's plans, full-time employment and job seeking strategies; 3). Complementary training and pro-activity 4). Confidence and optimism levels. The scope of analysis was focused on the emerging reality of the Portuguese unemployed people with graduate degrees, despite remaining unemployed for an uncertain length of time and in what extent entrepreneurship training programmes contribute to reduce the unemployment rates among the participants and to engage them on creating their own businesses. Nevertheless, more than merely analysing the impact of training on employment or self-employment likelihoods, this intervention aims at understanding if individuals who benefited by the program change positively their behaviour relative to networking and job offers applications, due precisely to that participation. The acknowledge of the best labour policies to mitigate structural unemployment, to correspond to unemployed needs and characteristics and to enhance a better match between labour's supply and demand is determinant on current days. This necessity, at the moment, is not only applied for low-skilled workers, but also, in an increasing rate, to high-skilled workers. These last ones are in general much less targeted to training programs than the low-skilled individuals. Most of active labour market policies are developed and provided to the most disadvantaged groups who face the greatest barriers and incentives to become employed. Therefore, a research gap in what respects the best labour market policies concerning this particular group of unemployed still remains to explore. European and Portuguese Active Labour Market Policies (ALMP's) The improvement regarding effectiveness of labour market policies in Europe entails the undertake of programmes at an early stage, so that it can prevent the occurrence of long-term unemployment; the need to establish an adequate profile of the participants to infer their specific weaknesses, skill's needs and to allocate them to the most suitable programme, the targeting of wage subsidies might be run at a small-scale basis, and the existence of appropriate incentives for employers to retain workers after the subsidy's expiration. The European Commission defines the different ALMPs into several categories, such as: Labour market services (category 1): job-search assistance; Training (category 2); Employment incentives (category 4): hiring incentives for firms; Supported employment and direct jobs (categories 5&6): target particularly long term unemployed, youth or groups facing problems of inclusion and integration in regular labour market and Start-ups incentives (category 7). The Portuguese institutions that implement and reinforce the labour market policies, with overall responsibility of the Ministry of Solidarity, Labour and Social Affairs are the Institute for the Innovation and Training (Instituto para a Inovação na Formação) and specially the Institute for Employment and Vocational Training (IEFP-Instituto do Emprego e Formação Profissional). The main goal of this organism is to promote the creation and quality of employment and mitigate unemployment spells, through the conduction of ALMPs, namely vocational training. Some of the most relevant active labour market policies involve: Stimulus to employment or employment subsidy, Employment's internships, National Plan of implementation of a young's guarantee, Active youth employment, Youth Investment Program, Youth Boost Program, Active Life Program and Vocational Education and Training (VET). Data and Methodology A randomized field experiment was conducted in order to analyse the causal impact of entrepreneurship training on labour market outcomes of graduate unemployed individuals in a manner as rigorous as possible. This training program, inserted in the program Active Life – Educate and Integrate was implemented through a partnership between Nova School of Business and Economics and Institute for Employment and Vocational Training (IEFP) - one of the main Portuguese institutions promoting active labour market policies and reintegrating the unemployed in labour market. The dataset used in this study is from Batista, C. (2013). One makes use of data on 94 unemployed individuals with higher education from IEFP's database. These data include the main demographic characteristics of project participants, such as name, age, email, personal contacts, current address, degree level, other qualifications or training participation and the main motivation for participating on this project. The intervention was implemented in October and November of 2012. From the 120 individuals of IEFP's initial dataset, 50 were randomly selected to the program, thus composing, the treatment group of those, who received the entrepreneurship training. The eligibility criteria for the participation in this program was based on the requirement that the involved individuals displayed at least one diploma of higher education not intrinsically or directly related to Management or Business issues. This experiment differs from the previous ones conducted on this field, in the sense that evolves exclusively graduate unemployed and the training is focused on entrepreneurial skills' improvement and their repercussion, among other outcomes, on individual's behavioural measures of networking, self-employment and employment probabilities. Main outcomes of the research and study's limitations To estimate the impact of entrepreneurship training, one should compare the outcomes of interest in the treatment and in the control group, with and without the baseline controls and other covariates. Individuals of both groups were followed –up through surveys at 3 and 6 months after the intervention. Due to the fact that only 94 individuals responded to both surveys, one excluded from the initial sample the remaining participants that were just followed up once. The most significant results of this study concerns the impact of training of behavioural measures of networking. Training's participants are significantly more likely to use LinkedIn for providing comments, likes or posts and also for adding connections (after three months of the intervention) or changing profiles (after six months of the intervention). Participants use at least every week the LinkedIn for essentially these purposes. Nonetheless, there was no evidence that the training enabled participants to distinguish more or less suitable job offers of Vida Activa or shared more these offers among them. The results of this experiment suggested that individuals who participated in training are not significantly more likely to become employed or full –time employed when compared to non-participants. There is no evidence that the training influenced substantially job seeking strategies of the beneficiaries compared to non- beneficiaries. There is evidence that the intention to become self-employed is positive but only of short-term and lose significance across time, which is congruent with existing literature. The same conclusion can be drawn from confidence levels' analysis. Confidence levels are no static, are reliable on conjecture indicators and may depend on opportunities to put in practice the new knowledge acquired. Some explanations behind the non-significance of the results on employment were provided, including the eminent economic and financial crisis, the rigidity and segmentation of Portuguese labour market prior to 2012's labour market reform, the learning curves and signalling theories and the skills mismatch present on labour market. For the self-employment results, those might be explained by the perceptions of uncertainty, market information asymmetry or unavailability, credit constraints, lack of financial incentives and risk inherent to the creation of a business as well as its sustainability over time, in particular under economic downturns evidenced on the context of this study. Implications for future research The main implications for future research comprise the insertion of risk aversion and entrepreneur's characteristics measures in order to obtain better results or understanding of other components that interfere on self-employment decisions. Additionally, conducting a qualitative research as a complement to the quantitative one is also important. This qualitative research might include measures of participants' satisfaction and suggestions for program's improvement. Lastly, in order to acquire significant results on employment rates, the classroom training, in which this entrepreneurship training is based, should be complemented with other types of training namely in -company training due to its benefits for future employment likelihood and acquisition of managerial skills and competences, also determinant for self-employment. ; Master [120] en sciences de gestion, Université catholique de Louvain, 2015