FINAL REPORT Supporting Self-Employment as a Reemployment Strategy: Impacts of a Pilot Program for Dislocated Workers After 18 Months August 31, 2018 Heinrich Hock • Mary Anne Anderson • Robert Santillano Submitted to: Submitted by: U.S. Department of Labor Mathematica Policy Research Employment and Training Administration 1100 1st Street, NE, 12th Floor 200 Constitution Avenue NW Washington, DC 20002-4221 Washington, DC 20210 Telephone: (202) 484-9220 Project Officer: Janet Javar Project Director: Heinrich Hock Contract Number: DOLQ121A21886/DOLU131A22087 Reference Number: 40247 This page has been left blank for double-sided copying. 18-MONTH IMPACT REPORT MATHEMATICA POLICY RESEARCH CONTENTS Acknowledgments and Disclaimer ......................................................................................................................... ix Abstract .................................................................................................................................................................. xi Executive Summary .............................................................................................................................................. xiii I. Introduction ................................................................................................................................................ 1 A. Self-employment as a reemployment strategy for dislocated workers ............................................... 1 B. Designing a new self-employment training program for dislocated workers ....................................... 4 1. SET targeting ................................................................................................................................ 4 2. The SET offer ............................................................................................................................... 5 3. Partnerships for operating SET as a pilot program ...................................................................... 6 C. Overview of the SET evaluation .......................................................................................................... 7 D. Organization of this report ................................................................................................................... 8 II. Approach to Evaluating the Impacts of SET ............................................................................................ 11 A. Selecting study sites and partners .................................................................................................... 11 B. Outreach, intake, and random assignment ....................................................................................... 12 C. Study data ......................................................................................................................................... 14 D. Analysis approach ............................................................................................................................. 14 III. Whom Did SET Serve, and How Was It Rolled Out? .............................................................................. 17 A. Distinctive characteristics of study enrollees .................................................................................... 17 B. Provider fidelity and differences in SET implementation across sites .............................................. 19 IV. Did SET Work as a Reemployment Program? ........................................................................................ 21 A. SET increased the rate of self-employment ...................................................................................... 22 B. SET led to greater overall employment in any type of job ................................................................ 23 C. SET did not significantly affect earnings ........................................................................................... 24 V. Receipt of Self-Employment Services and Other Job Services .............................................................. 25 A. SET had large impacts on the share of people who received any self-employment assistance services ............................................................................................................................................. 26 B. SET substantially increased receipt of individualized support, participation in classes/training, and peer-to-peer connections ........................................................................................................... 27 C. SET did not result in any changes in the share of people who received traditional job services ..... 28 VI. How Did SET Affect Business Development Activity?............................................................................. 31 A. SET led to increases in the rate of business plan completion .......................................................... 32 Lessons from a Self-Employment Pilot Program for Dislocated Workers iii 18-MONTH IMPACT REPORT MATHEMATICA POLICY RESEARCH B. SET also resulted in more program group members taking steps to formally establish their businesses ........................................................................................................................................ 33 C. SET more than doubled the share of people who received nonborrowed business funds ............... 34 D. SET did not change the rate of borrowing for a business ................................................................. 35 VII. In What Ways Did SET Support Self -Employment Activity? ................................................................... 37 A. SET increased the share of program group members who tried self-employment, but many would have done so anyway ............................................................................................................. 38 B. SET increased the number of hours worked in self-employment and led to a more consistently high level of effort in the program group ........................................................................................... 39 C. SET did not lead to any changes in average self-employment earnings .......................................... 40 D. SET did not lead to additional hiring of employees ........................................................................... 41 VIII. How Did SET Affect Other Work Outcomes? .......................................................................................... 43 A. The SET program group and control group had similar average wage/salary employment outcomes ........................................................................................................................................... 44 B. SET increased the share of people who worked in both wage/salary jobs and self-employment .... 45 C. SET was not associated with any change in job satisfaction among those who were working ........ 46 IX. Which Types of Study Enrollees Benefited from SET? ........................................................................... 47 A. The SET program increased self-employment rates for most study enrollees, especially those without recent small business experience......................................................................................... 48 B. SET’s impact on employment rates was similar across subgroups, and, in general, there was no impact on earnings ....................................................................................................................... 50 X. Discussion and Conclusions .................................................................................................................... 51 References ............................................................................................................................................................ 55 Lessons from a Self-Employment Pilot Program for Dislocated Workers iv 18-MONTH IMPACT REPORT MATHEMATICA POLICY RESEARCH EXHIBITS SET impacts in focus: Substantial increase in self-employment … and modest increase in employment of any type.............................................................................. 21 SET impacts in focus: Tripling the number of personalized contacts with self-employment assistance providers by the time of the survey ........................................................................................................ 25 SET impacts in focus: Increase in the share of people taking steps to formally establish a business by the time of the survey ............................................................................................................................ 31 SET impacts in focus: Increase in the share who typically worked at least 20 hours per week on their business ................................................................................................................................................. 37 SET impacts in focus: Increase in the share who both held a wage/salary job and were self-employed .......... 43 SET impacts in focus: Particularly large increases in self-employment among those without recent small business experience .............................................................................................................................. 47 Lessons from a Self-Employment Pilot Program for Dislocated Workers v This page has been left blank for double-sided copying. 18-MONTH IMPACT REPORT MATHEMATICA POLICY RESEARCH FIGURES ES.1. Evaluating the SET pilot program .........................................................................................................