Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper analyzes self-employment subsidies for the unemployed, a common policy in Europe. We develop a search model with self-employment to study how startup funding affects employment and welfare via individual choices and equilibrium forces. The model identifies three channels: (1) direct unemployment reduction, (2) crowding-out effect on paid-employment, and (3) a budget effect, whereby startup subsidies can generate fiscal savings. (1) and (3) are increasing with labor market rigidity. A simple calibration quantifies these channels and compares welfare effects across labor market structures.