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Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training
Last registered on July 26, 2016

Pre-Trial

Trial Information
General Information
Title
Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training
RCT ID
AEARCTR-0001234
Initial registration date
July 26, 2016
Last updated
July 26, 2016 2:47 PM EDT
Location(s)
Primary Investigator
Affiliation
Northwestern University
Other Primary Investigator(s)
PI Affiliation
University of California, Santa Cruz
PI Affiliation
Dartmouth College
Additional Trial Information
Status
Completed
Start date
2003-09-01
End date
2008-09-30
Secondary IDs
Abstract
Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees.
External Link(s)
Registration Citation
Citation
Fairlie, Robert, Dean Karlan and Jonathan Zinman. 2016. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training." AEA RCT Registry. July 26. https://doi.org/10.1257/rct.1234-1.0.
Former Citation
Fairlie, Robert, Dean Karlan and Jonathan Zinman. 2016. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training." AEA RCT Registry. July 26. https://www.socialscienceregistry.org/trials/1234/history/9666.
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Experimental Details
Interventions
Intervention(s)
Growing America through Entrepreneurship (Project GATE) was an evaluation designed and implemented by the U.S. Department of Labor and U.S. Small Business Association. The GATE experiment is the largest-ever randomized evaluation of entrepreneurship training and assistance, involving more than four thousand participants. Using Project GATE, we tested whether self-employment training effectively reduces difficulties that individuals face in identifying and securing employment by providing them with skills to start or expand small businesses. GATE was administered between September 2003 and July 2005 in seven cities of varying sizes. Fourteen different organizations provided the GATE training, including Small Business Association-funded and non-profit community-based organizations, all of which had been in operation prior to the experiment.

More than four thousand individuals applied for a limited number of slots for free entrepreneurship training services. Applicants were informed “GATE does not have space for everyone” and that a “lottery or random drawing will decide whether you will be able to enter the program.” Applicants assigned to receive the program were then offered an array of best-practice training services, beginning with a one-on-one assessment meeting to determine an individual’s specific training needs. Subjects assigned to the comparison group were not offered any free services. Baseline data comes from a nine-page application form, and follow-up surveys were conducted 6, 18, and 60 months after treatment.
Intervention Start Date
2003-09-01
Intervention End Date
2005-07-31
Primary Outcomes
Primary Outcomes (end points)
- Likelihood to produce a business plan
- Likelihood of business ownership
- Likelihood of business sales
- Likelihood of having an employee
- Likelihood of creating high-revenue or high-employment firms
- Employment
- Income
- Work satisfaction
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
Growing America through Entrepreneurship (Project GATE) was an evaluation designed and implemented by the US Department of Labor (DOL) and the US Small Business Administration (SBA). GATE’s objective was to “help emerging entrepreneurs in rural and urban communities achieve the American dream of owning their own business.” The evaluation was designed to capture existing representative training providers and recipients. The treatment phase of the evaluation ran from September 2003 to July 2005 in seven sites that represented both urban and rural areas. Follow-up surveys were mailed 6, 18, and 60 months after random assignment.

Individuals entered the study by completing an application process for a standard offer of free training from 1 of 14 established providers. The application process started with an orientation meeting at 1 of 21 One-Stop Career Centers in the 7 sites. Anyone attending the orientation meeting could then apply by completing and mailing a form with questions on demographics, work and business experience, and the individual’s current business or new business idea. Applicants were informed that “GATE does not have space for everyone” and that a “lottery or random drawing will decide whether you will be able to enter the program.”

Program coordinators randomized applicants to treatment or control with equal probability. Program administrators for each training provider then offered treatment applicants a standard array of free training services, told control applicants that the GATE program did not have the capacity to offer them services, and did not offer control applicants referrals to any other services. Individuals in both treatment and control groups were notified that they would be mailed follow-up surveys. GATE is the largest-ever randomized evaluation of entrepreneurship training and assistance, with 4,197 individuals randomized at baseline.

GATE training providers were chosen with a goal of (not quantitatively determined) representativeness of the subsidized training market. Fourteen organizations from seven different sites participated in the GATE study, with a mix of SBA-funded Small Business Development Centers (SBDCs) and nonprofit community-based organizations (CBOs) in both urban and rural locations. The 14 participating providers deliver services in and around Philadelphia; Pittsburgh; Minneapolis/St. Paul; Duluth, Minnesota; Virginia, Minnesota; Portland, Maine; Lewiston, Maine; and Bangor, Maine. Both types of organizations employ experienced business consultants to deliver one-on-one and group trainings.

99% percent of the treatment group actually received some training during the evaluation horizon, with 81% getting training within 6 months of entering the study. GATE training was customized for the individual from an array of services offered by the provider, as is typical in the subsidized market. Training began with a one-on-one assessment to produce a service plan that typically combined one-on-one services with selected group services. 64% percent of treatment group individuals then received one-on-one counseling/consulting that was customized to the individual’s experience, capabilities, circumstances, and opportunities. 77% percent of the treatment group received classroom/group training(s). These targeted a variety of general and specialized topics at different experience levels. Introductory workshops covered subjects such as legal structure, business plans, and marketing. Intermediate and advanced group trainings covered subjects including managing growth, obtaining financing, legal risks, and personnel issues. More specialized group trainings covered topics such as accounting, information technology, and web-based businesses.
Experimental Design Details
Randomization Method
Not done by authors of the paper, these were publicly available data. see government report, cited in the published academic paper
Randomization Unit
Individual
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
4,197 individuals
Sample size: planned number of observations
4,197 individuals
Sample size (or number of clusters) by treatment arms
treatment group: 2,094 individuals; control group: 2,103 individuals
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
July 31, 2005, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
September 30, 2008, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
2,450 individuals
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
2,450 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
treatment group: 1,274 individuals; control group: 1,176 individuals
Data Publication
Data Publication
Is public data available?
Yes
Program Files
Program Files
Yes
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees.
Citation
Fairlie, Robert W., Dean Karlan, and Jonathan Zinman. 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training." American Economic Journal 7(2): 125-161.