Examines short-term and long-term effects of entrepreneurship training programs in the United States using a large randomized experiment.

Project Growing America through Entrepreneurship (GATE) is a longitudinal study that was conducted by the U.S. Department of Labor and the Small Business Administration (SBA) in which free entrepreneurship training was randomly offered to individuals interested in starting or improving a business. Over 4,000 individuals applied across seven sites in three states, and best-practices training services were provided to the treatment group by Small Business Development Centers (SBDCs) and nonprofit community-based organizations (CBOs). The study begins by providing “more details on GATE, including its research design and implementation, the nature of the training services received by subjects, and external validity...[it then] presents first-stage results on training and business practices...[and finally] presents estimates of average and distributional effects on business ownership, scale, and performance, including a bounds analysis addressing differential attrition” (p.3).

(Abstractor: Author and Website Staff)

Major Findings & Recommendations

• The authors found that “training increases business planning and business ownership in the short-run, but that the marginal businesses are unsuccessful and fail to produce tangible or subjective benefits at any of the three follow-up horizons (6-, 18-, and 60-months).” They also found that “entrepreneurship training has relatively strong positive effects on business ownership for the unemployed in the short run, but these effects disappear by the long run” (p.20). • The authors did “not find any evidence that training shifts the distribution of firms in important ways (e.g., by disproportionately creating very successful firms) that might be missed by analysis of average treatment effects” (p.20). • “In all, the absence of positive effects of entrepreneurship training across numerous measures of business ownership, business performance and broader outcomes, and the estimated $1,321 per-recipient cost of providing GATE training, suggests that entrepreneurship training may not be a cost-effective method of addressing credit, human capital, discrimination, or social insurance constraints” (p.20). (Abstractor: Author and Website Staff)