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The main parameters of state self-employment assistance (SEA) programs for unemployed workers were tested in two experimental demonstrations authorized by the North American Free Trade Agreement Implementation Act. The Washington State and Massachusetts Unemployment Insurance (UI) Self-Employment Demonstrations evaluated the ability of the employment security and economic development systems to work together and help UI recipients create their own jobs by starting businesses. The classical experimental design randomly assigned applicants to either a treatment or a control group. Design differences between the two demonstrations were a requirement in the Massachusetts authorizing legislation that eliminated those with a low predicted probability of exhausting UI benefits and eligibility of Washington participants to receive a lump-sum payment of remaining benefits. The demonstrations were initiated in six Washington and seven Massachusetts sites. Relatively few new UI claimants in both states chose to pursue self-employment when the opportunity arose. Findings from a follow-up survey approximately 31 months after assignment in Massachusetts and approximately 33 months in Washington, indicated that both demonstrations increased the likelihood of self-employment, increased the total time in employment, and reduced the length of unemployment. Both programs were cost effective from the nonparticipant and government perspectives. (Appendixes include definitions of independent variables, significant coefficients, and effects on subgroups.) (YLB)

The first and longest section of this publication is a comparative analysis summarizing the impacts of the two Unemployment Insurance (UI) Self-Employment Demonstration Projects in Washington State and Massachusetts. Based on the first wave of post-project follow-up surveys, this evaluation report provides results on the net impacts of each project on the following: business formation and survival rates; participants' employment and earnings from both self-employment and wage and salary employment; participants' duration of unemployment and receipt of UI benefits; and job creation. In the Washington and Massachusetts demonstrations, self-employment assistance promoted rapid reemployment of project participants, directly increased job creation, and significantly increased participants' total employment. One additional result is reported for the Massachusetts demonstration: self-employment assistance significantly increased total earnings of participants. The second part of the publication focuses on the recent national legislation authorizing self-employment assistance (SEA) programs. This section includes the text of the legislation itself, North American Free Trade Agreement Implementation Act SEA Programs, and a Department of Labor program letter providing guidance to the states in developing their SEA program. A listing of 80 papers in the UI Occasional Paper Series is appended. (YLB)

The Washington State Self-Employment and Enterprise Demonstration (SEED) was the first federally sponsored self-employment demonstration program for unemployed workers in the United States. Its primary purpose was to determine the viability of self-employment as a reemployment option for recipients of Unemployment Insurance (UI) benefits who do not have immediate job prospects. The SEED Demonstration was implemented in six sites, representing both rural and urban areas of Washington, from September 1989 through March 1991. It was implemented as a classical experiment, in which eligible program applicants were randomly assigned either to a treatment group (N=755) or to a control group (N=752). Those assigned to the treatment group were offered business startup training, a waiver of the UI work search requirement, and periodic payments equal to their regular UI benefits. Those who achieved all project requirements were also eligible for a lump-sum payment equal to their remaining UI benefits. Interim impacts were based on data from a follow-up telephone survey approximately 21 months after assignment. Results indicated the SEED Demonstration dramatically increased the likelihood of being self-employed (by 25 percentage points), accelerated entry into self-employment (by 6 months), and increased earnings from self-employment (by about $3,000). It delayed reemployment in a wage and salary job (by 1 month) and reduced earnings from such jobs (by about $2,500). (An appendix defines independent variables.) (YLB)