Social Insurance and Removing Hurdles to Entrepreneurship

mar hurdlesA new entrepreneurship policy digest from the Kauffman Foundation suggests that policies that protect against some entrepreneurial risks and economic hazards might encourage more people to start companies. The thought is that hurdles like a lack of health insurance -- coupled with the inherently risky nature of entrepreneurship -- limit the number of would-be founders launching a new business. 

Can Social Insurance Unlock Entrepreneurial Opportunities? recommends the following strategies to reduce opportunity cost and encourage entrepreneurial experimentation. 

  • Reduce the opportunity cost of entrepreneurial experimentation. This can be accomplished through family-friendly policies such as subsidized child care or preschool to boost the number of female entrepreneurs, and reforming unemployment insurance to help nascent entrepreneurs mitigate the downside risks of starting businesses.
  • Facilitate asset accumulation. This is an especially important issue for millennials, many of whom are encumbered by heavy student debt burdens that make it difficult to accumulate the savings needed to bootstrap a startup.

The Kauffman Foundation occasionally releases similar policy briefs highlighting research on policy-related entrepreneurship issues at the state and federal levels covering a range of topics -- from economic implications of policy reform for immigrant entrepreneurs, to state and local entrepreneurship trends and how policies help advance this important job-creating source. PDE will continue to cover these, but you can also sign up to receive an electronic alert whenever a new digest is available.

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