First Impact Analysis of the Washington State Self-Employment and Enterprise Development (SEED) Demonstration. Unemployment Insurance Occasional Paper 94-1.

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)