Labor Topics

• Measuring Program Performance
• Finding Out What Works
• Using Vouchers to Deliver Services
• Helping Service Members
• Self-Employment as an Alternative Strategy
• Moving Young People into Productive Careers
• Encouraging Employment for Ex-Offenders
• Addressing Unique Problems of Experienced Workers
• Assisting DOL and Grantees
• Clients

•  

Project GATE: Growing America Through Entrepreneurship

Many individuals are motivated and capable of developing small businesses but lack access to credit or have little business expertise. Recognizing this untapped potential, the U.S. Department of Labor (DOL), Employment and Training Administration, initiated a demonstration to test ways of helping emerging entrepreneurs create, sustain, and/or expand their existing small business. Project GATE (Growing America Through Entrepreneurship) operated in seven urban/rural sites in three states—Maine, Minnesota, and Pennsylvania.

Almost anyone interested in starting or growing a small business was eligible to participate in Project GATE. Participants were offered an assessment of their business needs, classroom training, and one-on-one technical assistance in developing their business and applying for business financing. Nonprofit community-based organizations and the Small Business Administration’s Small Business Development Centers provided the services. Over 2,000 participants received entrepreneurial training and technical assistance.

Mathematica's evaluation addressed the following key questions:

• Can Project GATE be replicated on a larger scale? Was it implemented as planned? What were the prerequisites for effective implementation?
• Did the program work? Did Project GATE encourage development of new businesses? Did it increase self-employment, increase employment and earnings, and reduce receipt of unemployment insurance and public assistance? Did its effectiveness vary by how or in what context GATE was implemented? Did its effectiveness vary by population subgroup?
• Was the program cost-effective? Did the social benefits of the intervention exceed its social costs?

To address these questions, we designed and conducted process, impact, and benefit-cost analyses. The process evaluation involved collecting detailed information on program implementation through interviews with program staff, case studies of customers, observations of services, and focus groups with customers. It also involved an analysis of management information system data.

The impact evaluation included random assignment of about 4,200 GATE applicants into a program group and a control group. The program group received GATE services; the control group did not. The intake period, which began in fall 2003, ended in summer 2005. The impact evaluation was based on survey data collected 6 and 18 months after random assignment and state administrative records on unemployment benefits and quarterly earnings. The benefit-cost analysis involved placing a dollar value on all impacts of the program and comparing them with program costs.

Two follow-up surveys collected data on receipt of self-employment services, self-employment, business development, and employment in wage and salary jobs. Mathematica designed and pretested the instrument used for both surveys.

Findings from the final report show that Project GATE:

• Had a small but significant impact on business ownership but no effect on total employment
• Had a negative impact on overall earnings during the follow-up period because control group members earned more than participants from wage and salary jobs
• Increased the receipt of UI benefits slightly
• Had no impacts on the receipt of public assistance or other income

The findings suggest the following lessons:

• Self-employment service programs could be offered at One-Stop Career Centers. However, self-employment services are readily available even in the absence of Project GATE.
• Increased business ownership may not lead to increased self-employment earnings in the short run.
• Loss of earnings from wage and salary jobs is a significant short-run cost of a self-employment program.
• Self-employment programs have larger impacts on UI recipients.
• Eighteen months is too short a time to determine the effectiveness of Project GATE.

Mathematica was a subcontractor to IMPAQ International, LLC, along with Battelle Memorial Institute and the National Center on Education and the Economy.

Publications

"Growing America Through Entrepreneurship: Findings from the Evaluation of Project GATE" (May 2008)
“Growing America Through Entrepreneurship: Interim Report”  (August 2006)