IfM-Materialien 01.10.2010 | 2010 The opportunity costs of social security when changing from unemployment benefit I to self-employment: Simulation calculations for selected case groups

In view of the serious differences in the possibilities of social security offered to recipients of unemployment benefit I and self-employed persons, the present study examines how high the so-called opportunity costs of social security are when a recipient of unemployment benefit I becomes self-employed and what influence these opportunity costs have on his or her decision to become self-employed. The extensive simulation calculations show that in the vast majority of the cases investigated, the decision to become self-employed is accompanied by positive opportunity costs, provided that no start-up subsidy is received. If, on the other hand, the start-up subsidy is taken up, a change to self-employment is associated with financial advantages for far more groups of cases.