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Presentation

Startups - An Economic Development Tool? A Randomized Control Trial Study in Florida

Presentation Title
Startups - An Economic Development Tool? A Randomized Control Trial Study in Florida
Author
Dr. Neha Nanda - Senior Research Associate
Dates
August, 2017
Market
Workforce Development
Description

Neha Nanda presented the results of this study at the National Association for Welfare Research and Statistics (NAWRS) Annual Workshop, Pittsburgh, PA.

APA Citation

Nanda, N. (2017, August). Startups - An Economic Development Tool? A Randomized Control Trial Study in Florida. Presentation at the National Association for Welfare Research and Statistics (NAWRS) Annual Workshop, Pittsburgh, PA.

The State of Florida was hit particularly hard by the Great recession, and many educated and skilled individuals experienced long-term unemployment. CareerSource North Central Florida was awarded a workforce innovation fund (WIF) grant by Department of Labor to provide entrepreneurial training from 2013–2015 to unemployed and underemployed individuals in nine workforce regions in the state of Florida.

This unique and innovative training program strove to create new businesses and stimulate job creation among the middle and high-skilled individuals that became unemployed during the Great Recession. The program assigned teams of applicants to a patented NASA technology. Program sessions then guided participants to bring the product to market, with lessons on business plans, financial management, marketing, legal and licensing issues and project management. The program, known as Startup Quest®, offered a unique combination of entrepreneurial training and business mentoring to unemployed jobseekers with associate degrees or higher education. The primary objectives of the program involved improving the prosperity of workers, businesses, and communities by providing unemployed jobseekers with the knowledge, skills, confidence, and community support, necessary to become successfully self-employed or employed with a job. The program aimed to provide this population with the tools and training they need to create new businesses and stimulate job creation.

The evaluation consisted of an impact evaluation and an implementation study. The impact evaluation uses a randomized controlled design to estimate the impact of Startup Quest® program on rate of self-employment, rate of employment, earned income, and participation in public benefit programs, including unemployment insurance. Data for analysis was collected from program applications, wage records for 8 quarters prior to and after randomization and a follow-up survey. Impact evaluation results are supplemented by a process evaluation that focuses on how the implementation of the program affected workforce development stakeholders, including Workforce Development Boards, economic development agencies, training partners, and employers using qualitative data gathered via a series of site visits.

The effects of being offered the Startup Quest® program on salaried employment increased over time. In quarters 1 and 2, the treatment group was 1.8 percentage points more likely to be employed than the control group. But this increased to 6 percentage points during quarters 7 and 8 and became statistically significant. We also found increasing effects over time of the program on salaried earnings but it was not statistically significant.

In addition, Startup Quest® was effective in reducing reliance on UI Receipt and Duration. The program reduced participants' reliance on UI. Individuals in the treatment group were, on average, 6.7 percentage points less likely to receive UI benefits during the period between baseline and follow-up survey. In addition, Startup Quest® participants received UI benefits for a shorter period.

Finally, the program had no impact on self-employment outcomes. We hypothesize that the human capital accumulated by the participants in addition with the mentoring and networking opportunities provided by the program could have resulted in positive effects on labor market outcomes related to employment and reliance on UI.