SUPPORT MECHANISM:

The French unemployment law supports for startups. For two full years after quitting their work French resident can dispose of 60% of their previous salary up to a maximum of 30k/year. This gives sufficient freedom and time for French resident to get started on their startups.

One of the deterrents to entrepreneurs is the fear of giving up an existing job for a more uncertain path. Unemployment benefits may provide a safety net, but in many cases, these are withdrawn as soon as an individual starts working. In France, the benefit system was changed to grant entrepreneurs access to unemployment benefits for the first three years of their business, as well as in the event of startup failure.

 

RESULTS  :

One study suggests that this reform has led to 12,000 additional firms being created every year (Hombert, J., Schoar, A., Sraer, D. and Thesmar, D. Can Unemployment Insurance Spur Entrepreneurial Activity? (2014). doi:10.3386/w20717)

 

CHALLENGES + LESSONS TO DATE:

The broader lesson for policymakers is that whilst entrepreneurship is inevitably risky, reducing the downside does encourage prospective entrepreneurs to start up.