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Support schemes for unemployed persons which aim at becoming selfemployed have been recently reformed several times. In 2003, the “start-up-subsidy” (Existenzgründungszuschuss) was added to the existing “bridging-allowance” ( ¨ Uberbrückungsgeld) and the two programs together led to a strong increase in the number of supported start-ups. In 2006 both instruments were merged to the “start-up allowance” (Gründungszuschuss). Since the bridging allowance has been evaluated as effective and efficient and the start-up-subsidy reached new target groups, the latest reform shows several shortcomings. First of all, an end of the start-up boom is to be expected with the newly attracted target groups not being reached anymore. Secondly, the design of the “start-up allowance” is suboptimal, where efficiency losses can be expected if participants aim at maximizing social transfers. First empirical evidence from data of 2007 supports most of these expectations.

Hans Peter Grüner Universität Mannheim und CEPR London