Self‐Employment, Microenterprise, and the Poorest Americans

Abstract

Some advocates of microenterprise programs (MEPs) claim that self‐employment is a good way to help people on welfare. Although MEPs do increase the relative rate of movement from welfare to self‐employment, the change in the absolute number of people who move is probably less than 1 in 100. Most poor Americans who use MEPs are not among the poorest. Rather, they have the most assets, the most years of school, the most skills and experience, the strongest support networks, and one or more wage jobs. Cost‐effectiveness analysis is an inexpensive first step to evaluate whether MEPs are good public investments.