Growing America Through Entrepreneurship: 

Final Evaluation of Project GATE

December 2009

Jacob Benus

Theodore Shen 

Sisi Zhang

Marc Chan

Benjamin Hansen

Submitted to:

U.S. Department of Labor

Employment and Training Administration

200 Constitution Ave., NW

Room N-5637

Washington, DC 20210

Submitted by:

IMPAQ International, LLC

10420 Little Patuxent Parkway, 

Suite 300

Columbia, MD 21044

Telephone: (443) 367-0088

Facsimile: (443) 367-0477

Project Officer:

Jonathan Simonetta

Project Director:

Jacob Benus

Principal Investigator:

Sheena McConnell
ACKNOWLEDGEMENTS

The design, implementation, and analysis of the Growing America Through Entrepreneurship 

(Project GATE) demonstration required an extensive collaborative effort among the U.S. 

Department of Labor (USDOL); the Small Business Administration (SBA); the Departments of 

Labor of Minnesota, Pennsylvania and Maine; IMPAQ International (IMPAQ), Mathematica 

Policy Research (Mathematica); Battelle Memorial Institute (Battelle); Washington Software;

and a number of local organizations that provided business assistance services to participants in 

the project. Many individuals from these and other organizations have made valuable 

contributions to the success of the Project GATE demonstration.

The authors wish to particularly acknowledge a number of USDOL staff who contributed greatly 

to the success of the project. We particularly appreciate the support of Jonathan Simonetta, the 

USDOL Project Officer. Mr. Simonetta provided guidance and valuable input throughout the 

research design, implementation, and analysis stages of the project. 

Within IMPAQ, we would like to thank Lisa Lin and Alicia Schoua-Glusberg, who directed 

Wave 1 and Wave 2 of the survey; Julie Young who directed Wave 3 of the survey; Hugh 

Carrington who served as Project Manager and site monitor in the early years of the project; Mia 

Blecher and Julie Young who served as Project Manager in the latter years; and Eileen PoeYamagata who served as site-monitor and contributed to the process evaluation. 

This report benefits substantially from the work done by staff at Mathematica Policy Research. 

Mathematica staff contributed to the design, implementation, and analysis of the early impacts of 

Project GATE. In particular, we would like to thank Sheena McConnell, the Principal 

Investigator, who contributed to all study phases, as well as in the writing of the earlier report. 

We also acknowledge Jeanne Bellotti who led the process evaluation and the report on early 

GATE findings.

The success of the demonstration also owes much to Terry Johnson of Battelle. Terry provided 

invaluable guidance throughout the project.

We also thank the late Walter Corson, co-Principal Investigator at Mathematica. Walt’s ideas 

contributed significantly to the design of the demonstration. 
TABLE OF CONTENTS

Page

EXECUTIVE SUMMARY ........................................................................................................... i

CHAPTER I. INTRODUCTION .................................................................................................1

1.1 Self-Employment in the U.S. Economy ................................................................................2

1.2 Self-Employment Assistance Programs ................................................................................5

1.3 The Entrepreneurial Population.............................................................................................7

1.4 Prior Research on Effectiveness of Self-Employment Programs...........................................9

1.5 The Contribution of Project GATE .....................................................................................11

1.6 Organization of the Rest of the Report ................................................................................14

CHAPTER II. EVALUATION DESIGN ..................................................................................15

2.1 The Demonstration Sites......................................................................................................15

2.2 Random Assignment and Sample Development .................................................................16

2.2.1 The Counterfactual........................................................................................................ 17

2.2.2 Random Assignment Procedures.................................................................................. 18

2.2.3 Sample Enrollment........................................................................................................ 18

2.2.4 Business Partners......................................................................................................... 19

2.3 Implementation Analysis......................................................................................................20

2.4 Impact Analysis...................................................................................................................21

2.5 Conclusion ...........................................................................................................................24

CHAPTER III. PROJECT GATE IMPLEMENTATION......................................................26

3.1 Demonstration Sites..............................................................................................................26

3.2 GATE Service Providers ......................................................................................................31

3.3 Intake Procedures..................................................................................................................32

3.4 Outreach and Recruitment ....................................................................................................34

3.5 Services Offered ...................................................................................................................37

3.5.1 The Assessment: Tailoring Services to Participants’ Needs........................................ 39

3.5.2 Classroom Training: Building the Framework for New Businesses ........................... 40

3.5.3 Business Counseling ..................................................................................................... 42
3.6 Participant Tracking System.................................................................................................42

3.7 Conclusion ............................................................................................................................42

CHAPTER IV. RECEIPT OF SELF-EMPLOYMENT SERVICES ....................................44

4.1 Services Available to Program and Control Group Members..............................................44

4.2 Receipt of Any Self-Employment Services..........................................................................50

4.3 Hours of Services Received..................................................................................................53

4.4 Amount Spent on Services....................................................................................................55

4.5 Perceptions of Service Usefulness........................................................................................56

4.6 Conclusion ............................................................................................................................58

CHAPTER V. BUSINESS OWNERSHIP.................................................................................59

5.1 Business Ownership..............................................................................................................59

5.1.1 Overall Impacts on Business Ownership ...................................................................... 60

5.1.2 Impacts by Site.............................................................................................................. 64

5.1.3 Impacts by Receipt of Unemployment Insurance......................................................... 66

5.2 Impacts on Business Openings and Closures .......................................................................71

5.3 Number of Businesses Owned..............................................................................................73

5.4 Business Size ........................................................................................................................75

5.5 Time to Start First Business..................................................................................................79

5.6 Business Longevity...............................................................................................................81

5.7 Earnings from Businesses.....................................................................................................83

5.8 Differences in the Types of Businesses Developed..............................................................85

5.8.1 Ownership Structure ..................................................................................................... 86

5.8.2 Business Financing ....................................................................................................... 86

5.9 Challenges to Starting a Business.........................................................................................88

5.10 Conclusion ............................................................................................................................93

CHAPTER VI. EMPLOYMENT AND EARNINGS...............................................................94

6.1 Source of Data on Employment and Earnings......................................................................95

6.2 Employment Rate .................................................................................................................96

6.2.1 Self-Employment Rate................................................................................................. 96

6.2.2 Employment Rate at Wage and Salary Jobs................................................................ 99

6.2.3 Total Employment Rate ............................................................................................. 101

6.3 Hours Worked.....................................................................................................................104
6.3.1 Hours Worked at Self-Employment........................................................................... 104

6.3.2 Hours Worked at Wage and Salary Jobs.................................................................... 105

6.3.3 Total Hours Worked .................................................................................................. 106

6.4 Employment in Businesses Started.....................................................................................107

6.5 Earnings..............................................................................................................................109

6.5.1 Earnings from Self-Employment ............................................................................... 109

6.5.2 Earnings from Wage and Salary Jobs........................................................................ 113

6.5.3 Total Earnings............................................................................................................ 114

6.6 Job Satisfaction...................................................................................................................117

6.7 Characteristics of Wage and Salary Jobs............................................................................119

6.8 Conclusions.........................................................................................................................121

CHAPTER VII. IMPACT ON SELF-SUFFICIENCY..........................................................122

7.1 Receipt of Unemployment Compensation and Other Benefits...........................................122

7.2 Data Sources.......................................................................................................................123

7.3 Receipt of UI Benefits........................................................................................................124

7.3.1 Full Sample ................................................................................................................. 125

7.3.2 UI Recipients .............................................................................................................. 128

7.4 Household Income and Earnings of Spouses......................................................................129

7.5 Conclusion ..........................................................................................................................131

CHAPTER VIII. BENEFITS AND COSTS............................................................................132

8.1 Benefit-Cost Analysis.........................................................................................................132

8.2 Potential Benefits of Project GATE ...................................................................................134

8.2.1 Business Creation........................................................................................................ 134

8.2.2 Wage and Salary Employment.................................................................................... 135

8.2.3 Receipt of UI and Public Assistance........................................................................... 136

8.2.4 Comparison of Benefits: Full Sample and UI Recipients........................................... 138

8.3 Costs of Project GATE .......................................................................................................140

8.3.1 Sources of Cost Data................................................................................................... 140

8.3.2 Cost of Project GATE to DOL.................................................................................... 142

8.3.3 Costs of Project GATE to Society .............................................................................. 145

8.4 Summary of Benefits and Costs of Project GATE .............................................................147

8.5 Conclusion ..........................................................................................................................151

CHAPTER IX. LESSONS LEARNED AND POLICY IMPLICATIONS ..........................152
REFERENCES ..........................................................................................................................157

APPENDIX A. DATA COLLECTION FOR IMPACT ANALYSIS ..................................165

A.1 GATE Application Packet .................................................................................................165

A.2 Three Waves of a Follow-Up Survey ................................................................................170

A.2.1 Content of Questionnaires........................................................................................... 170

A.2.2 Survey Response Rates............................................................................................... 171

A.3 State Unemployment Insurance Agencies..........................................................................172

A.3.1 Data Collection Strategy............................................................................................. 176

A.3.2 UI Wage Records........................................................................................................ 176

A.3.3 Benefits....................................................................................................................... 177

APPENDIX B. SURVEY NONRESPONSE AND MISSING VALUES ..............................179

B.1 Treatment of Survey Nonresponse .....................................................................................179

B.2 Treatment of Item Nonresponse .........................................................................................181

APPENDIX C. ESTIMATION OF IMPACTS AND STANDARD ERRORS ....................189

C.1 Regression Model for Estimating Overall Impacts of Project Gate ..................................189

C.1.1 Estimation of Impacts................................................................................................. 190

C.1.2 Choice of Linear Regression...................................................................................... 190

C.1.3 Regression Predictors................................................................................................... 191

C.2 Calculation of Standard Errors ..........................................................................................192

APPENDIX D. SENSITIVITY ANALYSES...........................................................................193

D.1 Weighting Sites Equally .....................................................................................................193

D.2 Including All Business Partners.........................................................................................195

D.3 Excluding Imputed Values .................................................................................................195

D.4 Unweighted Analyses.........................................................................................................196

D.5 Difference-in-Means Analyses...........................................................................................196

APPENDIX E. Tables for Figures............................................................................................197

APPENDIX F. Receipt of Public Assistance ...........................................................................219

F.1 Full Sample ................................................................................................................. 219

F.2 UI Recipients .............................................................................................................. 221
LIST OF TABLES

Table I.1: Demographic Characteristics of the Entrepreneurial Population................................... 8

Table II.1: Number of GATE Applicants by Site ......................................................................... 19

Table III.1: Socioeconomic and Demographic Characteristics by Site ........................................ 28

Table III.2: Organizations Involved in Project GATE.................................................................. 31

Table III.3: One-Stop Career Centers Participating in Project GATE.......................................... 35

Table III.4: Summary of GATE Outreach Strategies by Site ....................................................... 36

Table III.5: How Orientation Attendees Heard About Project GATE.......................................... 37

Table III.6: Summary of GATE Infrastructure at Each Site......................................................... 40

Table IV.1: Programs That Provide Self-Employment Services at GATE Sites.......................... 46

Table IV.2: Impacts on Receipt of Self-Employment Services.................................................... 52

Table IV.3: Impacts on Hours of Self-Employment Services Received ...................................... 54

Table IV.4: Perceptions of Usefulness of Services at the Wave 3 Follow-up.............................. 57

Table V.1: Impacts on Business Ownership by Subgroup Random Assignment to Wave 3 ...... 69

Table V.2: Impacts on Number of Businesses Operated ............................................................. 74

Table V.3: Employees of Current or Most Recent Businesses.................................................... 76

Table V.4: Sales, Expenses, and Salary Payments of Current or Most Recent Business............ 78

Table V.5: Time to Start of First Business after Random Assignment ....................................... 79

Table V.6: Longevity of Business ............................................................................................... 81

Table V.7: Impacts on Earnings................................................................................................... 84

Table V.8: Ownership Structure of Most Recent Business at Wave 3 ........................................ 86

Table V.9: Financing of Most Recent Business........................................................................... 87

Table V.10:Challenges to Starting a Business.............................................................................. 89

Table V.11:Challenges to Starting a Business, by Success at Starting a Business....................... 92
Table VI.1: Number of Businesses by FTE Size ........................................................................ 108

Table VI.2: Number of FTEs Generated by Business Size ........................................................ 109

Table VI.3: Satisfaction With Employment at Wave 3 .............................................................. 118

Table VI.4: Characteristics of Current or Most Recent Wage and Salary Job ........................... 120

Table VII.1: Impacts on Receipt of UI Benefits......................................................................... 126

Table VII.2: Impacts on Receipt of UI Benefits (UI recipients)................................................. 128

Table VII.3: Impacts on Household Income and Spousal Earnings........................................... 130

Table VIII.1: The Costs of Project GATE in Changes in UI and Public Assistance Receipt .... 137

Table VIII.2: Comparison Benefit-Cost Analysis Participants' Perspective .............................. 139

Table VIII.3: Project GATE Costs by Site Based on Invoice Data ............................................ 143

Table VIII.4: Project GATE Costs by Site Based on Data from Service Providers................... 144

Table VIII.5: Estimates of Cost per Person-Hour of Self-Employment Services ...................... 146

Table VIII.6: Costs of Additional Services Received by GATE Participants............................ 146

Table VIII.7: Benefit-Cost Analysis (Full Sample).................................................................... 148

Table VIII.8: Benefit-Cost Analysis (UI Recipients) ................................................................. 149

Table A.1: Selected Background Characteristics of Program and Control Groups................... 167

Table A.2: Response Rates........................................................................................................ 172

Table A.3: Selected Background Characteristics of Program and Control Groups.................... 173

Table B.1: Rate of Nonresponse for Variables for Which Missing Values Were Imputed........ 182

Table D.1: Impacts on Key Outcomes Under Different Specifications...................................... 194

Table D.2: Site Weights Under Alternative Specifications (updated)........................................ 195
Table E.1: Table for Figure V.2.................................................................................................. 201

Table E.2: Table for Figure V.4.................................................................................................. 202

Table E.3: Table for Figure V.10................................................................................................ 203

Table E.4: Table for Figure VI.1 ................................................................................................ 204

Table E.5: Table for Figure VI.2 ................................................................................................ 205

Table E.6: Table for Figure VI.3 ................................................................................................ 206

Table E.7: Table for Figure VI.4 ................................................................................................ 207

Table E.8: Table for Figure VI.5 ................................................................................................ 208

Table E.9: Table for Figure VI.6 ................................................................................................ 209

Table E.10: Table for Figure VI.7 .............................................................................................. 210

Table E.11: Table for Figure VI.8 .............................................................................................. 211

Table E.12: Table for Figure VI.9 .............................................................................................. 212

Table E.13: Table for Figure VI.10 ............................................................................................ 213

Table E.14: Table for Figure VI.11 ............................................................................................ 214

Table E.15: Table for Figure VI.12 ............................................................................................ 215

Table E.16: Table for Figure VI.13 ............................................................................................ 216

Table E.17: Table for Figure VI.14 ............................................................................................ 217

Table E.18: Table for Figure VI.15 ............................................................................................ 218

Table E.19: Table for Figure VI.17 ............................................................................................ 219

Table E.20: Table for Figure VI.18 ............................................................................................ 220

Table E.21: Table for Figure VI.19 ............................................................................................ 221

Table E.22: Table for Figure VI.20 ............................................................................................ 222

Table F.1: Impacts on Receipt of Public Assistance................................................................... 219

Table F.2: Impacts on Receipt of Public Assistance (UI Recipients)......................................... 221
LIST OF FIGURES

Figure III.1: Stages of Participation in Project GATE.................................................................. 30

Figure III.2: Receipt of Service Among Program Group Members ............................................. 38

Figure IV.1: Impacts on Receipt of Self-Employment Services................................................... 50

Figure IV.2: Impacts on Hours of Self-Employment Services Received ..................................... 53

Figure IV.3: Amount Spent on Self-Employment Services between RA and the Wave 3........... 55

Figure V.1: Business Ownership Rate at Wave 1, 2, and 3.......................................................... 60

Figure V.2: Business Ownership by Quarter................................................................................ 62

Figure V.3: Impacts on Business Ownership by Site ................................................................... 65

Figure V.4: Impacts on Business Ownership................................................................................ 67

Figure V.5: Impacts on Business Openings................................................................................. 72

Figure V.6: Impacts on Business Closures................................................................................... 73

Figure V.7: Location of Current or Most Recent Business .......................................................... 77

Figure V.8: Time to Start First Business ...................................................................................... 80

Figure V.9: Business Longevity ................................................................................................... 82

Figure V.10: Impacts on Earnings................................................................................................ 85

Figure V.11: Lack of Capital or Start-up Funds is a Challenge.................................................... 90

Figure V.12: Finding Clients is a Challenge................................................................................. 91

Figure VI.1: Self-Employment Rate by Quarter (Full Sample).................................................... 97

Figure VI.2: Self-Employment Rate (UI Recipients at Random Assignment)............................. 98

Figure VI.3: Wage and Salary Employment Rate (Full Sample) ................................................. 99

Figure VI.4: Employment in Wage and Salary Jobs (UI Recipient at Random Assignment).... 100

Figure VI.5: Overall Employment Rate (Full Sample)............................................................... 102

Figure VI.6: Overall Employment Rate (UI Recipients at Random Assignment) ..................... 103

Figure VI.7: Self-Employment Hours (Full Sample) ................................................................. 104
Figure VI.8: Wage and Salary Employment Hours (Full Sample)............................................. 105

Figure VI.9: Total Employment Hours (Full Sample)................................................................ 106

Figure VI.10: Regular Self-Employment Salary Earnings (Full Sample)................................. 111

Figure VI.11: Regular Self-Employment Salary Earnings (UI Recipients at RA).................... 112

Figure VI.12: Wage and Salary Earnings (Full Sample)........................................................... 113

Figure VI.13: Wage and Salary Earnings (UI Recipients at RA).............................................. 114

Figure VI.14: Total Earnings (Full Sample).............................................................................. 115

Figure VI.15: Total Earnings (UI Recipients at Random Assignment)..................................... 116

Figure VI.16: Proportion of Very Satisfied with their Employment .......................................... 117

Figure VIII.1: Components of GATE Costs............................................................................... 144
Evaluation of Project GATE i December 2009

EXECUTIVE SUMMARY

Business ownership has always been a cornerstone of the American 

dream. Many Americans have dreamed of owning their own business at 

one time or another. The current social and economic climate presents 

unprecedented opportunity for aspiring entrepreneurs.1

Recognizing the untapped potential of Americans to start their own businesses and become selfemployed, the U.S. Department of Labor (DOL), Employment and Training Administration, 

teamed with the Small Business Administration (SBA) to create a demonstration project—

Project GATE (Growing America Through Entrepreneurship)—designed to help people create, 

sustain or expand their own business. This report examines the effectiveness of Project GATE in 

creating businesses and improving participants’ well-being during a 60-month observation 

period. An earlier report analyzed program impacts during an 18-month observation period 

(Benus et al. 2008).

Project GATE was implemented in seven sites in three states—Minnesota, Pennsylvania, and 

Maine—between fall 2003 and summer 2005. Almost anyone interested in starting or growing a 

small business was eligible to participate in Project GATE. Participants were offered an initial 

assessment of their business needs, classroom training, one-on-one business counseling, and 

assistance in applying for business financing. 

DOL’s One-Stop Career Centers were the gateways to the program. These centers, which 

provide a wide range of services for job seekers and employers, conducted outreach for Project 

GATE and hosted the program’s orientation sessions. Project GATE added another service—

one that focused on helping people become self-employed—to the One-Stop Career Centers’ 

arsenal of employment services. By offering this service in One-Stop Career Centers, Project 

GATE intended to attract new and more diverse customers to the public workforce system.

IMPAQ International and its subcontractor, Mathematica Policy Research, designed and 

implemented the evaluation of Project GATE to address the following questions: 

 

1 http://www.dol.gov/odep/pubs/business/business.htm
Evaluation of Project GATE ii December 2009

• Could Project GATE be replicated? 

• Was Project GATE effective in increasing business ownership, employment, and 

self-sufficiency? 

This report presents the findings from the evaluation and policy recommendations based on the 

evaluation results.

Project GATE Design

Project GATE was designed to serve almost anyone, whether employed or unemployed, who 

was interested in creating, sustaining or expanding a small business. The program was open to 

anyone 18 years of age or older who was lawfully able to work in the United States, resided in 

one of the demonstration states, and had a business idea that was legal and appropriate for 

federal support. If these criteria were met, no applicant was prevented from participating based 

on their particular business idea or their qualifications for starting a business. 

Intake for Project GATE involved three steps. First, people interested in Project GATE could 

register in a number of different ways: at a GATE kiosk, at a One-Stop Career Center, through

the GATE website, by mailing a postcard, or by calling a toll-free number. Second, those who 

registered for Project GATE were asked to attend an orientation session at a One-Stop Career 

Center. At the orientation, a video was shown that described GATE services, the GATE 

application process, and both the positive and negative aspects of self-employment. Finally, 

orientation attendees who wished to apply to Project GATE were asked to complete an 

application package and mail it to IMPAQ International. 

Half of those who completed the above three steps were randomly assigned to the GATE 

participant group and were eligible to receive GATE services. However, Project GATE 

emphasized customer choice: individual participants were not required to use any of the

program services. 

Each participant could decide to receive any, all, or none of the following: 

• Assessment. Participants were invited to meet with a counselor to determine the 

participant’s service needs and the provider that would best meet those needs. 
Evaluation of Project GATE iii December 2009

• Training. Project GATE offered a wide variety of training courses, including: 

general business courses; specific courses on topics such as how to deal with legal 

and personnel issues; and specialized training courses on such topics as QuickBooks. 

• Business Counseling. Participants were given the opportunity to meet with business 

counselors for one-on-one assistance with their business, business idea, and/or 

application for a business loan.

Project GATE was implemented in seven sites: 

• Philadelphia, PA

• Pittsburgh, PA

• Minneapolis/St. Paul, MN

• Northeast Minnesota including Duluth, MN and Virginia, MN; 

• Portland, ME;

• Lewiston, ME; and

• Bangor, ME. 

The sites were selected to include three sites in urban areas and four that were mostly rural—

northeast Minnesota and the three sites in Maine.

Evaluation Design 

The cornerstone of the evaluation of Project GATE was random assignment. A total of 4,198 

applicants to Project GATE were randomly assigned to either the program group or the control 

group. Members of the program group were offered GATE services; members of the control 

group were not. 

Random assignment ensured that the applicants assigned to the program group would have on 

average the same observable and unobservable characteristics as applicants assigned to the 

control group. Any differences in outcomes between the program and control groups can thus be 

directly attributed to Project GATE with a known degree of statistical precision.

While control group members could not participate in Project GATE, they were not prevented 

from receiving any other self-employment services offered in the community. Therefore, this 
Evaluation of Project GATE iv December 2009

evaluation does not address the impact of Project GATE compared to receiving no selfemployment services. Instead, it addresses the more policy-relevant question: What is the effect 

of adding Project GATE to the array of self-employment services already offered in the 

community?

The impact evaluation examined whether Project GATE affected four main outcomes: 

(1) the receipt of self-employment services; 

(2) business ownership;

(3) employment and earnings; and 

(4) self-sufficiency. 

To evaluate these outcomes and to give context to the findings, the evaluation used four sources 

of data:

• Participant Tracking System (PTS). The PTS is a web-based data collection system 

designed to capture project-related data on all individuals who expressed an interest in 

participating in Project GATE. The PTS captured data at each stage of their participation 

in GATE: registration, orientation, application, random assignment, assessment, referral, 

and service. A variety of project monitoring reports were created from the data captured 

in the PTS database; these reports proved invaluable in managing the implementation of 

GATE at each participating site.

• Site Visits. Four rounds of site visits were conducted. During these visits, interviews 

were conducted with Project GATE administrators, instructors, business counselors, and 

selected participants. 

• Three Follow-Up Surveys. The first telephone survey was conducted about six months 

after random assignment; a second survey was conducted about eighteen months after 

random assignment; a third survey was implemented about sixty months after random 

assignment. The sample frame included everyone who was randomly assigned to either 

the program or control group. A total of 3,450 Wave 1 interviews were completed, 
Evaluation of Project GATE v December 2009

yielding a survey response rate of 82 percent. The Wave 2 survey yielded 3,039 

completed interviews, for a response rate of 88 percent of the Wave 1 respondents. The 

Wave 3 survey resulted in 2,450 completed interviews, with a survey response rate of 81 

percent of the Wave 2 respondents. An analysis of sample attrition reveals that the 

observable characteristics of the program and control groups remained similar through all 

three survey waves. 

• Unemployment Insurance (UI) Administrative Data. Quarterly wage records and UI 

benefit data were collected for all GATE applicants for the time period covering the 12 

months before random assignment and the 12 months following random assignment. 

Administrative data were not available for the period after the Wave 2 interviews.

Implementation Analysis

A detailed implementation analysis, drawing on data from the application and orientation forms, 

the PTS, and site visits drew the following conclusions: 

• Project GATE incorporated a broad array of service providers;

• Training courses varied across sites; 

• A variety of outreach methods were used to attract applicants;

• About three-quarters of the program group received classroom training or individual 

counseling from Project GATE; 

• Project GATE participants received about 13 more hours of self-employment services 

than control group members; 

• The estimated cost of Project GATE per program group member based on the invoice 

data was $1,321; 

• Project GATE attracted a broad range of applicants; and 

• Project GATE could be implemented on a wider scale.
Evaluation of Project GATE vi December 2009

Impact Analysis

Overall impacts of Project GATE were estimated by comparing the mean value of each outcome 

among the program group to the mean value of the outcome among the control group. Impacts 

were also estimated by site and by subgroup. Special attention was paid to one subgroup: UI 

recipients at random assignment. This subgroup is of particular interest to DOL since many 

workforce programs are directed to assist UI recipients. Impact estimates for the full sample and 

for UI recipients on the key outcomes are presented in detail in Chapters V, VI, and VII. Below 

is a summary of the main findings. 

Business Ownership

• Project GATE had a statistically significant impact on the probability of owning a 

business only in the first few quarters after random assignment.

• Impacts on business ownership peaked shortly after random assignment and then 

began to fade. Both program and control group members experienced a steep growth 

in business ownership shortly after random assignment. At Wave 1, 44 percent of 

program group members and 38 percent of control group members reported owning 

a business. The 6 percentage point difference is statistically significant at the 1 

percent level. By the time of the Wave 3 survey, program group members were 

equally likely (37 percent) to own a business as control group members.

• Program group members started their first business sooner and their businesses had 

greater longevity than control group businesses.

• The impact on business ownership was substantially larger among individuals who 

were receiving UI benefits at random assignment. 

• Men were significantly more likely to benefit from Project GATE than women.

• GATE had no impact on the earnings of the self-employed. 
Evaluation of Project GATE vii December 2009

Total Employment 

• Project GATE increased the likelihood of self-employment during the first few 

quarters after enrollment. After the ninth quarter, the impact was not statistically 

significant. 

• Project GATE reduced the likelihood of wage and salary employment in about half 

of the quarters following random assignment. In the remaining quarters, the impact 

was insignificant. 

• Project GATE had no impact on the likelihood of total employment, defined as selfemployment plus wage and salary jobs.

• Among individuals who were receiving UI benefits at random assignment, Project 

GATE substantially increased the likelihood of self-employment in the early quarters 

after random assignment. 

• Project GATE generated additional jobs for non-participants.

Earnings from Self Employment and Wage and Salary Jobs

• Project GATE had no impact on regular self-employment earnings during any of the 

16 quarters following random assignment. 

• Project GATE had little impact on earnings from wage and salary employment. 

• With the exception of the first two quarters after random assignment, Project GATE 

had no impact on total earnings during the follow-up period. 

Self-Sufficiency

• Over the 60-month follow up period, Project GATE had no impact on the likelihood 

of UI benefit receipt, number of weeks of benefits, or amount of benefits. 

• For UI recipients, GATE had a significant positive impact on the number of weeks of 

UI benefits and total amount of UI benefits received between random assignment 

and Wave 1, but not thereafter. Over the 60-month follow-up period, Project GATE 
Evaluation of Project GATE viii December 2009

had no impact on the likelihood of UI benefit receipt, number of weeks of benefits, 

or amount of benefits. 

• Project GATE had no impact on the receipt of public assistance benefits. 

• Project GATE had no impact on household income or the earnings of the 

entrepreneur’s spouse.

Benefit-Cost Analysis

Policymakers generally view a program as cost-effective if all its benefits, summed over 

everyone in society, exceed all its costs. The magnitude of the benefits and costs to society 

indicate how the program affects net resources in the economy. The benefits and costs 

analysis yielded the following findings:

• During the follow-up period, program group members earned more, on average, 

from businesses than control group members. The full sample earned on average, 

approximately $1,100 more; the UI recipient subgroup earned, on average, $3,100 

more. 

• The cost to the Department of Labor (DOL) of providing GATE services was 

approximately $1,300 per program group member.

• The main cost of Project GATE was the loss of wage and salary earnings while 

starting a business. Program group members in the full sample earned on average, 

approximately $1,500 less than control group members; program group members in 

the UI recipient subgroup earned, on average, $1,100 less than their control group 

counterparts. 

• For the full sample, the measured costs of Project GATE exceeded its measured

benefits from the three perspectives analyzed: participants, non-participants, and 

society. For these three groups, costs exceeded benefits by $718, $989, and $1,707, 

respectively.
Evaluation of Project GATE ix December 2009

• For the UI recipient subgroup, however, the measured benefits of Project GATE 

exceeded its measured costs from two perspectives: participants and society. 

Participants had a net benefit of $4,523, while society had a net benefit of $2,192.

• Since our methodology of dealing with estimation uncertainty was uniformly 

conservative, our overall conclusion is that the benefits of Project GATE exceed its 

costs. 

Lessons Learned

The findings from this report suggest the following lessons:

• Self-employment service programs could be offered at One-Stop Career 

Centers. While One-Stop Career Centers are not traditionally known as places to go 

for self-employment services, Project GATE was able, with some marketing, to draw 

entrepreneurs and prospective entrepreneurs into the centers. 

• Self-employment services are readily available even in the absence of Project 

GATE. The evaluation was designed to examine the impact of adding Project 

GATE to the array of self-employment programs already available in the 

communities. Hence, control group members were not prevented from receiving 

other services in the community. Many did—about 78 percent of control group 

members received some self-employment services during the 60-month observation 

period.

• Increased business ownership does not lead to a statistically significant increase 

in self-employment earnings in the short run. Even though program group 

members were more likely to own a business, Project GATE had no statistically 

significant impact on business earnings in any of the 16-quarters after random 

assignment. 

• Loss of earnings from wage and salary jobs is a significant short-run cost of a 

self-employment program. While working on their businesses, GATE participants 
Evaluation of Project GATE x December 2009

worked less in wage and salary jobs than control group members, especially in the 

first few quarters after applying to the program. 

• Self-employment programs have larger impacts on UI recipients. Impacts on 

business ownership were higher for those who were receiving UI when they applied 

to Project GATE. Not having a wage and salary job provided UI claimants with 

more time to work on their businesses, while the UI benefits provided a regular 

income. 

• Eighteen months is too short to determine the effectiveness of Project GATE. 

The earlier Project GATE evaluation followed sample members for 18 months after 

random assignment—an extremely short period of time to receive services and build 

a successful business. The results from this 60-month follow-up study provide a 

more definitive assessment of the effectiveness of Project GATE.
Evaluation of Project GATE 1 December 2009

CHAPTER I.

INTRODUCTION

This report presents the results of a long-run assessment of the impact of Project GATE 

(Growing America Through Entrepreneurship). An earlier report (Benus et al. 2008) covered

impact results based on two follow-up surveys, conducted 6 and 18 months after enrollment. In 

this report, we focus on impact estimates based on a third follow-up survey conducted about five 

years after enrollment. Thus, the results reported here reflect the long-run impacts of Project 

GATE. 

In 2002, the U.S. Department of Labor (DOL), Employment and Training Administration, 

teamed with the Small Business Administration (SBA) to create a demonstration project—

Project GATE. This random assignment demonstration project was designed to assist people in 

creating, sustaining or expanding their own businesses. The demonstration was implemented 

between 2003 and the 2005 in seven sites in the following three states: Pennsylvania, Minnesota, 

and Maine. Almost anyone interested in starting or growing a small business was eligible to 

participate in Project GATE. GATE participants were offered an assessment of their business 

needs, classroom training, one-on-one business counseling, and assistance in applying for 

business financing. Nonprofit community-based organizations (CBOs) and the SBA’s Small 

Business Development Centers (SBDCs) provided the services. 

DOL’s One-Stop Career Centers were the gateways to the program. These centers, which 

provide a wide range of services for job seekers and employers, conducted outreach for Project 

GATE and hosted the program’s orientation sessions. Project GATE added another service—

one focused on helping people become self-employed—to the One-Stop Career Centers’ arsenal 

of employment services. By offering this service, it was also hoped that Project GATE would 

attract new and more diverse customers to the One-Stop Career Centers.
Evaluation of Project GATE 2 December 2009

This report addresses three main questions: 

(1) Can Project GATE be replicated?

(2) Is Project GATE effective in increasing business ownership, earnings, employment, 

and self-sufficiency? 

(3) Are the benefits of Project GATE commensurate with its costs? 

The rest of Chapter 1 discusses the policy interest in self-employment programs and reviews the 

literature that has developed on self-employment. It then describes the existing array of services 

available to provide self-employment assistance, prior research on the effectiveness of programs 

to promote self-employment, and how Project GATE is distinctive from the services already 

available. This first chapter ends by laying out the organization of the remainder of the report.

1.1 Self-Employment in the U.S. Economy

Self-employment plays a key role in today’s economy. The proportion of self-employed 

Americans has been growing rapidly since the 1970s (Fairlie and Meyer 2000). Recent Census 

Bureau data indicates that the trend is continuing and today more than 20 million Americans are 

self-employed, representing 11 percent of the nonfarm labor force.2 A close look at these 

numbers demonstrates the importance of small businesses in the U.S. economy. Each day, 2,356 

Americans decide to go into business for themselves. Their companies account for 78 percent of 

all U.S. businesses, and they collectively account for annual receipts of approximately $1 trillion. 

A recent report by the Kaufmann Foundation of Entrepreneurship3 reveals that from 2007 to 

2008, business starts increased, with approximately 530,000 new businesses created each month. 

In addition, the report finds that although the entrepreneurship rates for high-income potential 

businesses4

 

2

reduced sharply due to the current recession, the entrepreneurship rates for low- and 

http://www.census.gov/Press-Release/www/releases/archives/economic_census/010314.html

3 Kauffman Index of Entrepreneurial Activity, 1996-2008.

4 The report classified businesses according to the potential to produce high levels of income and growth. The lowand medium-income potential businesses are viewed as “necessity” entrepreneurship, while the high-income 

potential businesses are viewed as “opportunity” entrepreneurship.
Evaluation of Project GATE 3 December 2009

medium-income potential businesses continued to increase. Moreover, it has been argued that 

small businesses create a large share of new jobs and contribute to innovations in products and 

production processes (Birch 1979; Lerner 2002). 

Some workers view self-employment as a desirable substitute for, or supplement to, wage and 

salary employment.5

For many, however, lack of both business knowledge and access to credit pose significant 

barriers to self-employment. Lack of knowledge may encompass marketing, financing, 

understanding regulations, developing a business plan, or other aspects of starting and running a 

business. Disadvantaged populations in particular are less likely to have access to the 

information sources that provide such knowledge and skills (Brush 1990; Gould and Parzen 

1990; Keeley 1990). Many people may need loans to start their businesses but have little 

collateral and poor or no credit histories. Moreover, commercial banks are reluctant to make 

loans to small, risky ventures. To address these obstacles to self-employment, programs have 

been developed to provide classroom training, business counseling, and/or small loans to 

entrepreneurs. While many of these programs are open to everyone, they are often focused on 

the unemployed, welfare recipients, or other disadvantaged groups.

 Some even view it as a way out of poverty when they cannot find a 

desirable wage and salary job. Some research suggests that unemployed workers are more likely 

than wage and salary earners to enter self-employment (Meager 1992; Rissman 2003). While 

self-employment is not for everyone, many Americans do want to be self-employed. Some have

a passion for a particular business idea, while others want to be their own bosses, have no access 

to wage and salary jobs in which they can use their skills, and/or desire the flexibility of selfemployment. These people often are willing to work hard and have specific skills, interests, and 

talents they can use in a business. 

The factors that need to be considered by a potential entrepreneur are inherently complex and 

numerous, and entrepreneurs often have to bear a tremendous amount of risk when they start 

their businesses. A body of research has developed investigating why individuals choose selfemployment and what types of individuals choose it. In particular, research has found that 

 

5

 Throughout this report, the term wage and salary is used to describe jobs in which people work for someone else.
Evaluation of Project GATE 4 December 2009

entrepreneurs have unique abilities and training that have prepared them to operate their own 

business. Lazear (2005) developed a model which predicts that individuals with general skills 

are more suited to entrepreneurship than those with very specific training or experience. Testing 

the model using a survey of graduates from Stanford Business School, he confirms this 

prediction when finding that graduates who are employed in “general” as opposed to “specialist” 

positions are more likely to begin their own business. There could also be other avenues through 

which individuals acquire the skills for entrepreneurship. For instance, Dunn and Holtz-Eakin 

(2000) link together parents and their offspring using the National Longitudinal Surveys. They 

find that children of entrepreneurs are more likely to pursue self-employment, and that this 

increases with length and success of the parent’s business ownership. The intergenerational 

transmissions are strongest across family members of the same gender (i.e., fathers and sons, or 

mothers and daughters). Dunn and Holtz-Eakin see this as evidence that entrepreneurial parents

are transmitting skills specific to business-ownership to their children. Lastly, Evans and 

Leighton (1989) find that entrepreneurs tend to have a strong “locus of control,” or feeling that 

they can determine their own destinies. These attitudes and skills have been found to increase 

the odds that individuals will both attempt entrepreneurship and ultimately succeed at it. 

While skills play an essential role in beginning and operating a new company, nearly every small 

business requires some capital to begin operations. Holtz-Eakin et al. (1994) investigate the 

effect of a large influx of cash on both the survival probability and revenues of a nascent firm. 

Linking individuals across 1981 and 1985 income tax returns, they estimate the effect of a large 

influx of available capital using bequests. They find strong evidence of liquidity constraints for 

small firms. Injecting $150,000 into a firm increases its survival probability by 1.3 percentage 

points, and raises its receipts by 20 percent. Black and Strahan (2002) find that increased bank 

competition raises the number of loans given out, thus improving the potential for selfemployment outcomes. Finally, Bradford (2002) and Blanchard et al. (2005) find that 

differences in either access to credit or the availability of family members with money to lend 

may be important factors in explaining differences in self-employment. 

In addition to skills and resources, personal tastes have long been predicted to influence selection 

into entrepreneurship. One of the earliest ideas was that entrepreneurship is inherently risky, and 

therefore individuals with less risk aversion would be drawn towards self-employment (see 
Evaluation of Project GATE 5 December 2009

Kiholstrom and Laffont, 1979 and Kanbur, 1979). Testing this hypothesis, Cramer et al. (2002)

use data from the Brabant Survey of Dutch Children; they find lower levels of risk aversion in 

those who choose to begin their own business. 

Recent studies have confirmed the common observation that earnings among entrepreneurs are 

often lower than among full-time workers. Hamilton (2000) tests this using the Survey of Income 

and Program Participation. Among his principal conclusions, he finds that after ten years in 

business, entrepreneurs earn 35 percent less than similar individuals who are full-time workers. 

Hamilton views this as evidence of large non-monetary benefits of being an entrepreneur, such 

as being one’s own boss and enjoying increased flexibility. In a related study, Gimeno et al. 

(1997) surveyed businesses from the National Federation of Independent Businesses to analyze 

how individuals set thresholds of performance. They find that entrepreneurs who are more 

motivated, and have family members who have previously owned their own business, set lower 

thresholds of acceptable performance when deciding whether to continue or abandon their small 

business. This is viewed as potential evidence that previous exposure to small business 

ownership or a passion for one’s product/service increases the level of non-monetary satisfaction 

associated with the business.

1.2 Self-Employment Assistance Programs

In the late 1970s and early 1980s, several European countries established programs to help 

unemployed workers become self-employed. Most of these programs provided either income 

support or seed capital, together with some training or business counseling. The Chomeur 

Createurs (Unemployed Entrepreneurs) program in France, implemented nationally in 1980, 

allowed persons to collect unemployment benefits in a lump sum to finance businesses. The 

Enterprise Allowance Scheme, implemented nationally in Britain in 1983, provided business 

counseling and an allowance roughly equal to unemployment benefits for up to one year 

(Robinson 1993).

In the United States, the past two decades have seen a rapid increase in programs designed to 

assist people in starting their own businesses. The number of programs offering training, 

business counseling, or loan assistance, for example, increased from a handful in 1982 to nearly 

700 in 2002 (Walker and Blair 2002). Frequently administered by community action groups, 
Evaluation of Project GATE 6 December 2009

community development corporations, or women’s economic development centers, the programs 

target mainly low-income populations, the unemployed, welfare recipients, refugees, other 

disadvantaged groups, and women. Funding for these programs comes from federal, state, or 

local governments, as well as private foundations. 

Organizations partially funded by SBA—such as SBDCs and Business Information Centers—

also provide assistance to people interested in creating, sustaining or expanding businesses. 

SBDCs, often associated with a college or university, offer one-on-one business counseling and 

training in business development. The SCORE is also a partner of the SBA. Composed of 

former businessmen and businesswomen, SCORE provides free one-on-one counseling to those 

interested in starting businesses. Business Information Centers provide resources for small 

business start-up and development, including computer hardware and software; a library of 

magazines, books, and videos; and on-site counseling through SCORE.

As a response to positive findings from demonstrations of self-employment programs for UI 

recipients, Congress in 1993 authorized states to establish Self-Employment Assistance (SEA) 

programs for UI recipients. The authorization was for a five-year period, after which DOL was 

required to submit a report to Congress on the status of the programs. 

The report to Congress (Vroman, 1997) recommended permanently adding SEA to the array of 

programs assisting the unemployed, because SEA increased the likelihood of self-employment.

The states with functioning SEA programs served a client base that was older, more highly 

educated, with lower minority representation, and more likely to come from professional, 

technical, and managerial occupations than the UI population as a whole. In 1998, Congress 

passed new legislation permanently authorizing SEA programs. 

SEA programs provide training and business counseling in self-employment. They also pay the 

UI recipient an allowance equal to the participant’s UI benefits, even though the participant does 

not need to search for work and can refuse a job offer. The amount of the allowance is not 

affected by self-employment income, to avoid acting as a disincentive. 

Although the SEA legislation authorized all states to implement SEA programs, a majority of 

states chose not to implement them. Since its inception, only 11 states have passed enabling 
Evaluation of Project GATE 7 December 2009

legislation. Eight of those implemented SEA programs -- California, Delaware, Maine, 

Maryland, New Jersey, New York, Oregon, and Pennsylvania. California terminated its program 

in July 1998; Pennsylvania’s funding for its SEA program has been intermittent.

1.3 The Entrepreneurial Population

About 11 million individuals in the United States are actively working to start a small business. 

To study this population, the Panel Study of Entrepreneurial Dynamics (PSED) collects data on 

the process of business formation using a nationally representative sample of nascent 

entrepreneurs. The first wave (PSED I) began with a telephone screening interview in 1998-

2000, which identified a cohort of 830 individuals actively engaged in creating a small business. 

Three follow-up interviews were conducted. PSED I data collected included demographic 

variables, activities during business start-up, and characteristics of new firms. A second wave 

(PSED II) began with a screening interview in 2005-2006 that identified a new cohort of 1,214 

nascent entrepreneurs; two follow-up interviews were administered, at 12 and 24 months. 

An analysis of the PSED I data (Gartner et al. 2004) found that the median amount of time 

between the first organizing activity performed to start a business and the first receipt of money, 

income, or fees from the sale of goods and services was 25 months. A number of different 

activities may constitute the first organizing activity, such as buying or leasing equipment, 

facilities or property; or establishing credit from a supplier. The PSED I data indicate that 

among the U.S. entrepreneurial population as a whole in 1999, the median amount of time 

between the first organizing activity and when monthly revenues exceeded monthly expenses 

was 38 months. 

Gartner et al. (2004) also analyzed the demographic data from PSED II. The demographic 

characteristics of these individuals are shown in Table I.1. For comparison, we present the 

demographic characteristics of Project GATE participants in the same table.
Evaluation of Project GATE 8 December 2009

Table I.1: Demographic Characteristics of the Entrepreneurial Population

U.S. 

Entrepreneurial 

Population

GATE

Gender

 Male 64% 54%

 Female 36 46

Race6

 White 65 57

 Black 17 31

 Other 18 11

Hispanic Descent

 Hispanic 16 5

 Non-Hispanic 84 95

Age

 18-29 31 13

 30-44 38 44

 45-64 29 41

 65+ 3 1

Education

 Less than HS 8 4

 High School 23 22

 Some College 31 37

 College 26 18

 Post-Graduate 13 19

Marital Status

 Married 57 43

 Never Married 30 30

 Other 14 26

Source: Panel Study of Entrepreneurial Dynamics (PSED II), Participant Tracking System (PTS) Data

 

6 Numbers may not add to 100 percent due to rounding
Evaluation of Project GATE 9 December 2009

Almost two-thirds (64 percent) of the entrepreneurial population in the United States is male and 

almost two-thirds (65 percent) is white. The percentages are somewhat lower for the GATE 

population (54 percent male and 57 percent white). In the United States, approximately one out 

of six (16 percent) is Hispanic; among the GATE participants a much smaller proportion (5

percent) is Hispanic. The vast majority of both groups (over 90 percent) have at least a high 

school diploma, the majority (70 percent or more) has at least some college, and well over one 

out of ten have some post-graduate education.

1.4 Prior Research on Effectiveness of Self-Employment Programs

Much of the development of programs to help people become self-employed has been shaped by 

research on their effectiveness. This research has shown that self-employment programs can 

improve labor market outcomes. Classroom training and one-on-one business counseling have 

been found to be key components of these programs. 

In the late 1980s, an evaluation of self-employment programs in two states, Massachusetts and 

Washington, was conducted in the UI Self-Employment Demonstration (Benus et al. 1995). The 

goal of the demonstration in both sites was to help UI recipients create their own jobs by starting 

businesses. In both states, UI recipients were required to attend workshops on issues related to 

business start-up and were offered financial assistance. The projects differed between the states 

in two important ways. First, they differed in their target populations. In Massachusetts, the 

project was offered only to those new UI claimants identified using a statistical profiling model 

as being likely to exhaust their benefits; in Washington, the project was offered to most new UI 

claimants. Second, following the French model, participants in Washington could receive their 

remaining available UI benefits in one lump-sum payment after meeting certain business 

milestones. In contrast, following the British model, participants in Massachusetts received 

periodic payments, but no lump sum.

As with Project GATE, the two demonstrations were evaluated using an experimental approach. 

Applicants to the programs were randomly assigned to either a program or a control group. 

Members of the program group could participate in the self-employment program, while control 

group members could not. Approximately 1,200 sample members (both program and control 

groups) were followed up in Massachusetts for about 31 months, and approximately 1,500 
Evaluation of Project GATE 10 December 2009

sample members in Washington were followed up for about 33 months. The findings from these 

evaluations were generally positive but differed somewhat between the two states:

• In Massachusetts, program group members were more likely than control group 

members to have a spell of self-employment during the follow-up period. However, 

the impact did not persist. By the end of the follow-up period, a little more than 30 

months after random assignment, there were no differences between program and 

control group members in the prevalence of self-employment. Combined selfemployment and wage and salary earnings for program group members was about 

$6,000 higher than combined earnings for control group members over the 31 

months after random assignment. However, this resulted from an increase in 

earnings from jobs in which participants worked for someone else; self-employment 

earnings did not increase. In a benefit-cost analysis, the Massachusetts 

demonstration yielded net benefits to society and to the government because of the 

increase in earnings. 

• In Washington, program group members were also more likely than control group 

members to have a spell of self-employment sometime during the follow-up period. 

Unlike in Massachusetts, the impact did persist and the increased self-employment 

led to increased self-employment earnings. This increase in self-employment 

earnings, however, was almost completely offset by a decrease in earnings from 

wage and salary employment, so it did not lead to an increase in total earnings. The 

demonstration yielded net benefits to society, but a net cost to the government.

In 1987, the U.S. Department of Health and Human Services approved a demonstration project—

the Self-Employment Investment Demonstration (SEID)—designed to test the viability of selfemployment as a means of helping welfare recipients. Five states implemented and funded the 

model: Iowa, Maryland, Michigan, Minnesota, and Mississippi. The SEID model contained four 

basic components: (1) business training, (2) self-esteem training, (3) business counseling, and (4) 

assistance in securing business financing. Unlike the UI Self-Employment Demonstration, SEID 

did not include an evaluation of program impacts, although some follow-up of outcomes was 

conducted. Of the 1,300 people who enrolled in SEID, 408 started a business during the 
Evaluation of Project GATE 11 December 2009

demonstration, and about half were able to leave welfare (Raheim and Alter 1998; Guy and Fink 

1991). The demonstration suggested that when well-targeted and focused, programs to help 

people become self-employed could assist some low-income people in achieving economic selfsufficiency (Servon and Bates 1998). 

In a non-experimental evaluation of the effectiveness of the Self Employment Assistance (SEA) 

program in Maine, New Jersey, and New York, Kosanovich and Fleck (2001) compared the 

outcomes of SEA participants with those of persons who were eligible for SEA but decided not 

to participate in the program. The evaluation found that two to three years after program 

enrollment, SEA participants were much more likely to be self-employed, were more likely to be 

employed in either their own businesses or in regular wage and salary jobs, and were more 

satisfied with their work than were people who were eligible for SEA but declined to enroll. SEA 

participants also received more UI benefits on average. These findings, while suggestive, should 

be interpreted with caution. The differences in outcomes may be due to unobserved differences 

in the characteristics of SEA participants and eligible nonparticipants rather than to impacts of 

the program itself. 

1.5 The Contribution of Project GATE 

DOL contracted with IMPAQ International and its subcontractors7

Most communities have organizations that provide assistance to people who want to start their 

own businesses. Project GATE used many of those organizations to provide similar services. 

However, Project GATE differed from the programs already available at the sites in the 

following ways:

to design a program that 

provided participants with training and business counseling, including help in applying for 

business loans. The project sought to increase employment, earnings, and self-sufficiency. By 

promoting small businesses and the jobs they create, Project GATE also aimed to promote 

economic development in some low-income areas.

 

7 Mathematica Policy Research, Inc., Battelle Memorial Institute, and the National Center on Education and the 

Economy.
Evaluation of Project GATE 12 December 2009

• One-Stop Career Centers Played a Key Role – The goal of One-Stop Career Centers 

is to provide a wide range of services to assist job seekers in finding employment and 

to aid employers in finding employees. While some centers provide information 

about the SEA program or other related programs, many provide little or no 

information about self-employment programs. Most of the training funded out of 

One-Stop Career Centers focuses on developing skills for a particular wage and salary 

occupation. 

Project GATE was viewed as another service to be added to the array of employment 

services already provided by DOL’s workforce investment system. The One-Stop 

Career Centers were the “first stop” in the provision of GATE services. They 

conducted outreach by housing electronic kiosks with information about Project 

GATE within the centers themselves, placing brochures about GATE in their resource 

rooms, displaying posters, and describing the program in orientations. The One-Stop 

Career Centers also hosted a mandatory orientation for those interested in Project 

GATE. 

• Outreach Was Much More Extensive – Most self-employment service providers do 

not conduct extensive outreach. People usually find out about their services through 

their websites or word of mouth. In contrast, Project GATE used a broad outreach 

campaign that included paid marketing campaigns, public service announcements, 

notices about Project GATE inserted in the envelopes containing UI checks, and 

information about the program in the form of posters and flyers at all One-Stop 

Career Centers. This difference in outreach approach is likely to affect the population 

served.

• GATE Assessment Staff Matched Participants with and Referred Them to Specific 

Providers – Providers of self-employment services differ in the services they provide 

and in how they provide those services. Some focus on providing classroom training; 

others focus on providing business counseling. Some providers are more experienced 

at providing services to well-educated clients; others are better able to help 

disadvantaged populations.
Evaluation of Project GATE 13 December 2009

Most self-employment providers serve any participant and refer participants to 

another provider only for services that they do not provide (such as business loans). 

Therefore, it is often up to participants to find the provider that best meets their needs. 

One of the innovative aspects of Project GATE was that it involved an individualized 

needs assessment and referral to providers. Soon after their eligibility for Project 

GATE was determined, participants were invited to meet one-on-one with a trained 

business counselor to talk about their business ideas and the challenges they faced in 

starting a business. As a result of the assessment, participants were then directed to 

the services and the GATE providers that would best meet their needs. 

• GATE Participants Did Not Pay for Services – Most service providers charge a fee 

for their services. SBDCs do not charge for one-on-one business counseling but do 

charge for training. CBOs usually charge a fee, often on a sliding scale. In contrast, 

Project GATE provided services free of charge to participants. 

• Project GATE Did Not Screen Out Participants Based on Likelihood of Success –

Many programs that provide self-employment services screen out, or strongly 

discourage, participants they view as unlikely to succeed. Reasons for screening out 

may include the multiple barriers a participant faces—such as lack of capital, lack of 

skills or knowledge to produce the services or product, naiveté about the challenges 

of starting a business, or an unrealistic business idea.

Project GATE accepted into the program everyone who met the eligibility criteria—

participants were required to be at least 18 years old, lawfully able to work in the United 

States, and seeking to create, sustain or expand a business that was legal and appropriate 

for federal support. If these criteria were met, no applicant was prevented from 

participating based on a particular business idea or his or her qualifications for starting a 

business. 
Evaluation of Project GATE 14 December 2009

1.6 Organization of the Rest of the Report

This report provides a comprehensive description and assessment of Project GATE. In order to 

provide the reader a complete, self-contained report, we repeat some descriptive sections from 

the earlier GATE report (Benus et al. 2008). Specifically, we repeat a description of the 

evaluation design (Chapter II) and a description of the implementation of Project GATE 

(Chapter III). The next four chapters describe the impacts of Project GATE on the receipt of 

self-employment services (Chapter IV), self-employment (Chapter V), employment in wage and 

salary employment and total employment (Chapter VI), and self-sufficiency (Chapter VII). The 

benefits and costs as well as the cost-effectiveness of Project GATE are analyzed in Chapter 

VIII. The report ends with a summary of lessons learned (Chapter IX).
Evaluation of Project GATE 15 December 2009

CHAPTER II.

EVALUATION DESIGN

The cornerstone of the evaluation is the random assignment of 4,198 eligible Project GATE 

applicants to either a program group or a control group. Program group members were offered 

Project GATE services; control group members were not. Using three waves of telephone 

surveys together with Unemployment Insurance (UI) administrative data, the outcomes of both 

program and control group members were observed over time.

The evaluation of Project GATE addresses three questions: 

(1) Did Project GATE work?

(2) For whom did it work?

(3) Under what circumstances did it work? 

The evaluation also addresses how Project GATE was implemented and whether it could be 

replicated on a wider scale, as well as whether Project GATE met its objectives of increasing 

business ownership, increasing employment, and improving self-sufficiency. The evaluation 

explores whether the impacts of Project GATE vary by where and how it is implemented. It also 

explores whether the impacts of Project GATE vary between various population subgroups. 

This chapter describes the design of the evaluation of Project GATE. It begins by describing the 

demonstration sites. It then describes random assignment, sample development, the approaches 

to conducting the implementation, and the impact analysis. 

2.1 The Demonstration Sites

Project GATE was implemented in seven sites:

• Philadelphia, Pennsylvania – At this site, five One-Stop Career Centers and three 

nonprofit CBOs participated in Project GATE. 
Evaluation of Project GATE 16 December 2009

• Pittsburgh, Pennsylvania – At this site, seven One-Stop Career Centers and the 

Duquesne University SBDC participated.

• Minneapolis/St. Paul, Minnesota – At this site, four One-Stop Career Centers (two 

in Minneapolis and two in St. Paul), the University of St. Thomas SBDC, and two 

CBOs (Women Venture; and the Hmong American Mutual Assistance Association)

participated. 

• Northeast Minnesota – The northeast Minnesota site included the cities of Duluth 

and Virginia and surrounding areas. Two One-Stop Career Centers, the University 

of Minnesota at Duluth SBDC, and one CBO (Northeast Entrepreneur Fund) 

participated. 

• Maine – Project GATE was implemented in three sites in Maine. These sites 

included the cities of Bangor, Portland, and Lewiston and surrounding areas. Three 

One-Stop Career Centers participated, as did the University of Southern Maine 

SBDC, three CBOs (Main Centers for Women, Work and Community; Penquis 

Community Action Program; and Coastal Enterprises, Inc.), and the Center for 

Entrepreneurship at the University of Southern Maine, in partnership with the Heart 

of Maine organization. For analytical purposes, the three sites in Maine are grouped 

together into one because of their geographic proximity and because Maine 

implemented Project Gate in the three sites as a single administrative entity. 

The sites were selected purposively to include three sites in urban areas and four sites, northeast 

Minnesota and three sites in Maine, that comprise largely rural areas.

2.2 Random Assignment and Sample Development

The key design feature of the evaluation of Project GATE is random assignment. Those who 

attended a GATE orientation, submitted a GATE application, and were found eligible for Project 

GATE were randomly assigned to either the program group or the control group. In order to 

ensure that random assignment was conducted consistently across all sites and without any sort 

of bias, the evaluation contractor performed the random assignment using a computer program 
Evaluation of Project GATE 17 December 2009

which called on a random number generator. Members of the program group were offered 

Project GATE services; members of the control group were not. 

The use of random assignment ensures that the applicants assigned to the program group will 

have, on average, the same observable and unobservable characteristics as applicants assigned to 

the control group. As a result, any differences in outcomes between the program and control 

groups can be directly attributed to Project GATE with a known degree of statistical precision. 

Without random assignment, there is always a concern that any differences in outcomes between 

the program and control group members result from differences in their underlying 

characteristics rather than program participation. 

2.2.1 The Counterfactual

The goal of any program evaluation is to provide an estimate of the effects of a program by 

comparing outcomes of program participants to what would have happened to them in the 

absence of the program. Since it is impossible to do this, an experimental evaluation uses the 

control group as a counterfactual that credibly represents what would have happened to program 

participants had they not been offered GATE services. 

Control group members could not participate in Project GATE—they could neither receive a 

GATE assessment nor be referred to a GATE provider for free business counseling and/or 

classroom training. However, control group members were not prevented from receiving any 

other self-employment services offered in the community. Hence, they could receive services 

from providers that were not chosen for Project GATE or did not want to participate in Project 

GATE. They could even receive services from the GATE providers. However, control group 

members needed to find these providers on their own and may have had to pay for the services. 

The names of the GATE providers were given after random assignment to GATE program group 

members only; control group members were never given the names of any self-employment 

service providers. 

The services that the control group members receive—the counterfactual—determine the 

research questions the evaluation addresses. Hence, it is important to note that this evaluation 

does not address the impact of Project GATE compared to receiving no self-employment 
Evaluation of Project GATE 18 December 2009

services. Instead, it addresses the more policy-relevant question: What is the effect of adding 

Project GATE to the array of self-employment services already offered in the communities? 

2.2.2 Random Assignment Procedures

Individuals interested in participating in Project GATE were asked to register for the program 

and attend an orientation. At the orientation, they were shown a video that described the 

challenges of self-employment, the services provided by Project GATE, and the evaluation, 

including random assignment. Those still interested in the program after the orientations were 

asked to complete a nine-page application package. This package asked for information to 

determine eligibility for Project GATE, including information on the characteristics of the 

applicant and his or her business idea, detailed contact information, and the signature of the 

applicant confirming willingness to participate in the evaluation. The package was mailed to the 

evaluation contractor, which checked that the applicant was eligible, had completed at least most 

of the application package, had consented to participate in the study, and had not applied to 

Project GATE previously. Once the applicant had passed these checks, he or she was randomly 

assigned to the program group or the control group, each with a probability of 50 percent. The 

evaluation contractor then notified the applicant by mail of their assignment to either the 

program or the control group and sent a list of new program group members to the service 

providers. After orientation, applicants took an average of 2.0 weeks to complete an application 

and mail it to the evaluation contractor. Applicants were randomly assigned less than one week 

later on average.

2.2.3 Sample Enrollment

Nearly all GATE applicants were randomly assigned. Only three applicants were found 

ineligible, because their business idea was inappropriate for federal funding. In total, 4,198 

applicants were randomly assigned between September 2003 and July 2005 (see Table II.1); just 

under half were assigned to the program group and just over half to the control group.
Evaluation of Project GATE 19 December 2009

Table II.1: Number of GATE Applicants by Site

Site Total Program Group Control Group

Philadelphia 1,179 601 578

Pittsburgh 595 288 307

Minneapolis/St. Paul 1,654 834 820

Northeast Minnesota 203 97 106

Maine 567 275 292

Total 4,198 2,095 2,103

Source: Participant Tracking System

Since the enrollment period was approximately the same for all sites, one might expect that the 

number of applicants would be approximately the same across all sites. However, more than 

two-thirds of all applicants were in two sites—Minneapolis/St. Paul and Philadelphia. Less than 

one-fifth were from the rural sites—northeast Minnesota and the three sites in Maine. This 

variation in enrollment rates across sites may be explained by various factors, including 

differences in population density, business culture, economic environment, and demographic 

characteristics of the local population.

As expected, random assignment produced program and control groups whose members had 

similar background characteristics at baseline (Appendix Table A.1). Of the 121 characteristics 

examined, program and control group members differed in 8 characteristics at the 5 percent level 

of statistical significance, which is close to what would be expected by chance. Of relevance, 

program group members were slightly younger, had received fewer weeks of unemployment 

insurance (UI) benefits in the past year, and were slightly less likely to have ever been selfemployed. These differences were accounted for in the impact analyses.

2.2.4 Business Partners

Examination of the application data revealed that some applicants applied to Project GATE with 

their business partners. Of the 4,198 applicants, 245 applicants (about 6 percent of all 

applicants) reported on their application packages a plan for a business that was identical to that 

of another applicant. All but about 2 percent of these applicants lived with the person who had 
Evaluation of Project GATE 20 December 2009

the same plan. While about 91 percent of these applicants had one other partner who applied, 9 

percent were in partnerships with 2 to 4 other applicants. The 245 applicants represented 118 

business partnerships.

The participation of people who work together on a business raises a concern about 

contamination in the evaluation. A control group member who had a business partner in the 

program group could benefit from any services or information received by his or her partner. 

Some GATE providers would even allow business partners to accompany the GATE participant 

to classes and business counseling sessions.

To avoid the problem of control group contamination, all members of the business partnership 

were deleted from the sample if: (a) at least one member of the business partnership was in the 

control group, (b) at least one other member was in the program group, and (c) these two 

individuals lived at the same address or submitted the same business idea on their GATE 

Application Form. Of the 118 business partnerships, 56 (47 percent) had at least one program 

group member and one control group member and were removed from the sample. These 56 

business partnerships consisted of 120 applicants. The remaining sample contained only 

business partners who were either all in the program group or all in the control group and hence 

were not at risk of contamination. The remaining sample members in business partnerships were 

representative of the sample members who were removed from the sample and were reweighted 

such that the weighted sum of business partnerships was the same as in the original sample. 

2.3 Implementation Analysis

The goals of the implementation analysis were to: (1) describe how Project GATE was actually 

implemented in the demonstration; (2) describe how implementation differed across sites; (3)

derive lessons for other sites interested in implementing Project GATE or a similar program; and 

(4) determine whether Project GATE could be successfully replicated elsewhere. 

The analysis uses data collected from the following sources:

• Participant Tracking System (PTS) – All Project GATE applicants completed an 

application package before they were randomly assigned. The application package 
Evaluation of Project GATE 21 December 2009

provided rich data on the characteristics of the applicants just prior to random 

assignment. An orientation form completed by everyone who attended an 

orientation provided information on people who attended the orientation but did not 

complete an application. In addition, all service providers collected information on 

the results of the assessments, the referrals to service providers, and the type and 

intensity of services the program group members received from Project GATE. All 

these data items were captured by the Participant Tracking System (PTS), an 

Internet-based data collection system created by IMPAQ. A final extract from the 

PTS was taken on December 31, 2005. GATE applicants were randomly assigned 

during the period from late September 2003 through early July 2005. Hence, at least 

six months of data were available on all program group members.

• Site Visits – Two rounds of site visits were conducted to collect detailed information 

on the implementation of the programs. These site visits took place in Fall 2004 and 

Spring 2005. During these site visits, interviews were conducted with 

administrators, instructors, and business counselors at the service providers; and 

observations were made of orientations, assessments, classroom training, and oneon-one counseling. GATE service providers assisted in the selection of 18 program 

participants who were then interviewed in depth about their experiences in Project 

GATE and in starting their businesses. During the first round of site visits, eight 

focus groups of randomly selected program participants were conducted, with at 

least one focus group occurring in each site.

The findings from the implementation analysis are summarized in Chapter III and discussed in 

detail in Bellotti et al. (2006). 

2.4 Impact Analysis

The main goal of the impact analysis is to determine whether Project GATE was effective in 

meeting its goals. Hence, it examines whether Project GATE affected four main categories of 

outcomes: (1) the receipt of self-employment services; (2) business ownership, including 

attempts to start a business, success in starting a business, and the characteristics of the 

businesses started; (3) employment and earnings in both wage and salary jobs and in self-
Evaluation of Project GATE 22 December 2009

employment; and (4) receipt of UI benefits, total household income, public assistance, and 

spouses’ earnings. The analysis also examines whether these impacts differ for different groups 

of applicants and whether they vary by where and how Project GATE was implemented.

The impact analysis draws on two additional sources of data other than the PTS and the site 

visits8

• Three Follow-Up Surveys – A first wave (Wave 1) of telephone interviews was 

attempted with all program and control group members approximately 6 months after 

random assignment. A second wave (Wave 2) of telephone interviews was 

conducted approximately 18 months after random assignment. A third wave (Wave 

3) was conducted approximately 60 months after random assignment. In Wave 2 

and Wave 3, only those individuals who had completed the previous wave of the 

survey were contacted for interview. These surveys provide detailed information on 

outcomes such as receipt of services, completion of business plans and applications 

for loans, business development, employment, income, and receipt of UI and other 

benefits. A total of 3,450 Wave 1 follow-up interviews were completed, yielding a 

survey response rate of 82 percent. The Wave 2 follow-up resulted in 3,039 

completed interviews, with a survey response rate of 88 percent of Wave 1. The 

Wave 3 survey resulted in 2,450 completed interviews, with a survey response rate 

of 81 percent of Wave 2. In each wave, the response rates were slightly higher for 

the program than for the control group. Since 2,450 individuals out of 4,198 

completed all three waves, the overall response rate for the entire series of three 

waves was 58 percent.

:

9

• UI Administrative Data. – To obtain data on UI claims and receipt of UI benefits, 

state UI administrative records for all applicants were collected. Quarterly wage 

records and UI benefit data were collected for the period covering the 12 months 

prior to random assignment and the 12 months following random assignment. 

 

 

8 More information about data collected for the impact analysis is provided in Appendix A.

9 More details on the response rates are provided in Appendix A.
Evaluation of Project GATE 23 December 2009

Since applicants were randomly assigned, unbiased estimates of the impact of Project GATE can 

be obtained by comparing the average outcomes for those in the program and control groups. To 

improve the precision of the estimates and correct for any differences in the sample members’ 

characteristics that occurred by chance between the two groups, impacts were estimated using 

regression models. With each impact estimate is an indication of whether the estimate passes a 

two-tailed t-test at the 1 percent, 5 percent, or 10 percent levels of significance. Appendix B 

provides detail regarding weighting and imputation procedures, Appendix C provides more 

details of the impact estimation, and Appendix D discusses the sensitivity of the findings to the 

estimation method.

This report presents estimates of the impacts of Project GATE on all program group members 

rather than impacts on those program group members who actually received Project GATE 

services. Hence, it is an estimate of the offer of Project GATE services rather than their receipt.

However, most participants did receive some services—90 percent of those who were randomly 

assigned to the program group received at least an assessment from Project GATE. Estimates of 

the impacts on the individuals who actually received services can easily be calculated by 

dividing the estimates of the impacts on participants by 0.9 and adjusting the standard errors 

accordingly (Bloom 1984; Angrist et al. 1996; Heckman et al. 1998).

This report focuses mainly on overall differences in outcomes between program and control 

groups for all the demonstration sites combined. Each sample member is given equal weight. 

Hence, the overall impacts are disproportionately affected by the impacts in Minneapolis/St. Paul 

and Philadelphia. Generalizing these results to a larger scale implementation of Project GATE 

would require assuming that sites that are like the Minneapolis/St. Paul and Philadelphia sites 

would have more participants than sites like the Pittsburgh and rural sites. This is likely to be the 

case unless the larger scale implementation focused on rural sites. 

To assess the variability of the impacts across sites and sample member characteristics, selected 

estimates are presented separately for each study site and for subgroups defined by the following 

characteristics of the sample members as of random assignment: age, gender, race/ethnicity, 

education level, wage and salary employment, self-employment, receipt of UI benefits, and selfemployment prior to random assignment. Most of the outcomes considered will be defined for 
Evaluation of Project GATE 24 December 2009

all members of the program and control groups. However, in some cases the outcomes compare 

members of the program and control groups within a particular subset of the sample. In 

particular, this approach is adopted when the subsets are defined by the outcome. These 

differences across subsets defined by outcomes may be referred to as “conditional differences.” 

For example, consider the types of businesses formed by those who start businesses. As the 

sample members who started businesses are not random, and participation in Project GATE may 

affect who starts a business, the differences in the types of businesses formed by people in the 

program group and those formed by people in the control group should not be interpreted as an 

“impact” of Project GATE. Care should be taken in the interpretation of these types of 

differences. The differences in the types of businesses formed, for example, could have occurred 

either because Project GATE changed the types of businesses formed or because Project GATE 

led to different types of people starting businesses. 

Of the 4,198 individuals randomly assigned to the program or control group, 3,450 (82 percent) 

completed the Wave 2 survey. Of these 3,450 individuals, 3,039 (88 percent) completed the 

Wave 2 survey. Of these 3,039 individuals, 2,450 (81 percent) completed the Wave 3 survey. 

Thus, 72 percent of the original sample completed Waves 1 and 2 of the survey, and 58 percent

of the original sample completed all three survey waves. 

If those who responded to a survey differ in a systematic way from those who did not respond, 

then impact estimates may be biased. To adjust for observable differences in the baseline 

characteristics of survey respondents and non-respondents, and to reduce the potential for biased 

estimates, the survey data are weighted. The weights are designed so that the survey respondents 

represent all the GATE applicants who were randomly assigned in each research group and site. 

Some survey respondents did not respond to some questions (they may not have remembered the 

date they began a job, for example). For such missing data items, standard imputation methods 

were used to impute a value. Appendix B provides more details of the weighting and imputation 

procedures.

2.5 Conclusion

In this chapter, we have described the seven demonstration sites in Project GATE; the use of 

random assignment to create a program and a control group with approximately 2,100 
Evaluation of Project GATE 25 December 2009

individuals in each; the removal of business partners where one partner was assigned to the 

program group and one to the control group; and the data sources for the implementation 

analysis as well as for the impact analysis. 

In the next chapter, we turn to an in-depth discussion of how Project GATE was implemented in 

the seven sites —covering project demonstration sites; GATE service providers; intake 

procedures; outreach and recruitment; services offered; and the Participant Tracking System.
Evaluation of Project GATE 26 December 2009

CHAPTER III.

PROJECT GATE IMPLEMENTATION

Because Project GATE was a new demonstration program, an important goal of the evaluation 

was to document how Project GATE was actually implemented at each site. This type of

analysis is valuable for two reasons. First, lessons learned from the implementation are valuable 

for future implementations of the program. Indeed, in June 2008, DOL awarded grants to four 

additional states to implement programs very similar to Project GATE, and experience gained 

from Project GATE was instrumental in helping these four states design their programs. Second, 

an understanding of the implementation at each site provides context for the findings from the 

impact evaluation and helps interpret those findings. For example, the presence of a work search 

waiver for unemployed individuals in Minnesota who were Project GATE program group 

members enriches our understanding of impacts in that state.

This chapter discusses the main findings from the implementation analysis of Project GATE.10

3.1 Demonstration Sites

 

The chapter begins by discussing the characteristics of the demonstration sites and the service 

providers participating in the program. Next, it describes the intake procedures used to enroll 

interested individuals and the specific outreach and recruitment strategies used to attract 

prospective sample members to the demonstration. The chapter then discusses the services 

offered by Project GATE. 

Project GATE was implemented in seven sites in three states: 

1. Minneapolis/St. Paul, MN

2. Northeast Minnesota

3. Philadelphia, PA

 

10 Bellotti et al. (2006) provides a detailed analysis of the implementation of Project GATE. See: 

http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_resultDetails&pub_id=2337&bas_option=Keywords&s

tart=1&usrt=4&stype=basic&sv=1&criteria=Project%20GATE
Evaluation of Project GATE 27 December 2009

4. Pittsburgh, PA

5. Bangor, ME

6. Portland, ME

7. Lewiston, ME

These sites, chosen purposively, differ in several key ways. Key characteristics of the general 

population in the communities in which Project GATE was implemented are presented in Table 

III.1. First, three sites are urban (Minneapolis/St. Paul, Philadelphia, and Pittsburgh) and four 

sites principally rural (northeast Minnesota and the three sites in Maine). Second, all sites except 

Philadelphia have predominantly white populations with small Hispanic/Latino populations. In 

contrast, the population in Philadelphia is 43 percent African American and 10 percent 

Hispanic/Latino. The Minneapolis/St. Paul area has a substantial Asian population. Third, the 

sites vary in the average education and income of their populations. Minneapolis/St. Paul has a 

more educated and higher-than-average–income population, while Philadelphia has a less 

educated and lower-than-average–income population. 

Finally, the sites vary in the predominance of small businesses. Maine has the largest percentage 

of self-employed people—9 percent of all its workers. The percentage of workers who are selfemployed at the other sites is lower than the national average of 7 percent. Although many 

factors may influence these differences in the prevalence of self-employment, GATE program 

staff in Maine suggested that residents of the state have a tradition of using self-employment to 

either make a living or supplement income from other jobs. In contrast, GATE program staff in 

both Pennsylvania sites described a tradition of working for large companies in their state.
Evaluation of Project GATE 28 December 2009

Table III.1: Socioeconomic and Demographic Characteristics 

of the General Population by Site

Sitea

Characteristic Minneapolis

/ St. Paul

NE 

Minnesota Philadelphia Pittsburgh Maine USA

Race

White 81% 95% 45% 84% 97% 75%

African 

American 9 1 43 12 1 12

Other 10 4 12 3 3 13

Hispanic/Latino 

Origin 5 1 10 1 1 14

Education

Less than high 

school 9 13 29 14 15 20

High school 

graduate 21 32 33 34 36 29

Some college 30 34 20 24 26 27

Bachelor degree 

or higher 39 22 18 28 23 24

Families Below 

Poverty Level 5 7 18 8 8 9

Workers Who Are 

Self-Employed 5 6 4 5 9 7

Median Household 

Income $51,711 $36,306 $30,746 $38,329 $37,240 $41,994

Persons per 

Square Mile 2,005 32 11,234 1,755 41 80

Source: U.S. Census Bureau, 2000 Census; Statistics of U.S. Businesses, 2001; Bureau of Labor Statistics, 2004.

a Statistics given for the County of Philadelphia, Allegheny County, Hennepin County, St. Louis County, the state of 

Maine, and the United States. Unemployment rates are for 2004; all other data are for 2000. 
Evaluation of Project GATE 29 December 2009

The GATE Experience

Project GATE consisted of seven distinct stages. 

1. Registration. Having heard about Project GATE through the outreach campaign, 

individuals expressed interest in finding out more about the project by registering at the 

Project GATE Web site, calling a toll-free telephone number, sending in a postcard 

provided at One-Stop Career Centers, or registering via the Internet using Project GATE 

kiosks placed at One-Stop Career Centers.

2. Orientation. All individuals who registered for the program were mailed a letter inviting 

them to attend a one-hour orientation session to learn more about the project.

3. Application. At the end of the orientation session, individuals who were still interested 

in participating in the project were provided with a paper Application Form to fill out and 

mail to the evaluation contractor. This 9-page form requested extensive information 

about the individual’s background and interest in self-employment and served as the 

primary source of baseline data for the evaluation. 

4. Random Assignment. Using a random number generator, a computer program 

randomly assigned eligible applicants to either the program group or the control group, 

with a 50 percent chance of being assigned to either group.

5. Assessment. All individuals randomly assigned to the program group were directed to 

contact an assessment counselor in their area for the assessment interview.

6. Referral. The assessment counselor, together with the participant, decided which of the 

available services would best meet the participant’s self-employment training needs, and 

referred the participant to that service provider.

7. Service. The service provider offered entrepreneurship training services to the 

participant, including classroom training as well as individualized business counseling.

The stages of Project GATE are shown in Figure III.1:
Evaluation of Project GATE 30 December 2009

Figure III.1: Stages of Participation in Project GATE
Evaluation of Project GATE 31 December 2009

3.2 GATE Service Providers

Project GATE involved multiple service providers at all sites except Pittsburgh (see Table III.2). 

Altogether, fourteen organizations were involved across all sites. Providers were competitively 

selected based on four criteria: (1) experience in providing services to assist with business 

development; (2) ability to provide training in business development and business counseling, 

including assistance with loan applications; (3) ability to serve sufficient numbers of participants; 

and (4) ability to provide the services at reasonable cost. 

Table III.2: Organizations Involved in Project GATE

Site Assessment Training and Business Counseling

Minneapolis/

St. Paul

University of St. 

Thomas, SBDC

Hmong American 

Mutual Assistance 

Association (HAMAA)

University of St. Thomas, SBDC

Women Venture

Hmong American Mutual Assistance Association 

(HAMAA)

Northeast 

Minnesota

University of 

Minnesota at Duluth, 

SBDC

University of Minnesota at Duluth, SBDC

Northeast Entrepreneur Fund (NEEF)

Philadelphia IMPAQ 

International11

Women’s Business Development Center (WBDC)

Women’s Opportunity Resource Center (WORC)

The Enterprise Center

Pittsburgh Duquesne University, 

SBDC Duquesne University, SBDC

Maine University of Southern 

Maine, SBDC

University of Southern Maine, SBDC

Maine Centers for Women, Work, and Community 

(WWC)

Penquis Community Action Program (CAP)

Coastal Enterprises, Inc.

Center for Entrepreneurship at the University of Southern 

Maine/Heart of Maine

 

11 The original design of GATE called for SBDCs to provide assessments. However, in Philadelphia, the local 

SBDCs (Wharton and Temple) chose not to participate in the demonstration. Therefore, IMPAQ International, the 

evaluation contractor, provided assessments in Philadelphia.
Evaluation of Project GATE 32 December 2009

All providers except one were either SBDCs or nonprofit CBOs. The exception was the Center 

for Entrepreneurship in Maine, located at the School of Business at the University of Southern 

Maine, which partnered with the Heart of Maine, a resource, conservation, and development 

organization.

SBDCs and CBOs differ in several important ways, including mission, clientele, staff, and 

service provision. The mission of SBDCs is economic development—to provide assistance for 

small business development so as to maintain and strengthen the economy. In contrast, the 

mission of most CBOs is workforce development—assisting individuals to become selfsufficient. Discussions with staff at both SBDCs and CBOs suggest that the two types of 

organizations also serve quite different clients. SBDCs in general serve clients who are more 

educated, have higher incomes, are more likely to be employed, and are further along in starting 

or planning their businesses than is the CBO typical client. Staff characteristics also differ, with 

SBDC staff members more likely to be male, white, highly educated, and more experienced in 

providing self-employment assistance than are staff members at CBOs. Finally, while both 

SBDCs and CBOs provide training and business counseling, they differ in the ways they provide 

these services. SBDC counselors expect their clients to be very self-directed. CBOs provide 

more assistance, give more direction as to what clients need to do, provide more help with tasks, 

and follow-up with clients more regularly.

3.3 Intake Procedures

Project GATE was designed to serve almost anyone, whether employed or unemployed, who 

was interested in starting a business. The program was open to anyone 18 years of age or older 

who was lawfully able to work in the United States, resided in the state, and wished to create, 

sustain or expand a business that was legitimate and appropriate for federal support.12

 

12 Out of more than 4,200 GATE applications, three were rejected due to illegal or inappropriate business ideas.

 If these 

criteria were met, no applicants were prevented from participating based on their particular 

business idea or their qualifications for starting a business. Instead, individuals were expected to 

self-select into or out of the application process through a three-tiered intake procedure that 
Evaluation of Project GATE 33 December 2009

involved (1) registration, (2) attendance at an orientation, and (3) completion of an application 

package.

Persons interested in Project GATE first registered for the program by providing their name and 

mailing address at a GATE kiosk housed at a One-Stop Career Center, at the GATE Web site, by 

mailing a postcard from the GATE brochure or poster, or by calling a toll-free number. 

Registered individuals were then notified by mail of the times and locations of GATE 

orientations in their area. The letter asked the individual to contact the One-Stop Career Center 

most convenient to them to sign up for an orientation, but did not provide any description of the 

length of the orientation session or the topics to be covered.

Orientations were held at the participating One-Stop Career Centers, and attendance was 

required before a GATE application could be submitted. In addition to providing information 

about services available through Project GATE and at the One-Stop Career Centers, the 

orientation involved a discussion of some of the negative aspects of self-employment, referred to 

as the “cold shower,” which was designed to ensure that Project GATE applicants had realistic 

expectations about self-employment. The orientation session typically lasted one hour, including 

a standard video describing self-employment and Project GATE. 

Orientation session attendees who remained interested in participating were then given a ninepage GATE Application Form to take home to fill out. This application form collected baseline 

data on demographics, self-employment experience, and wage and salary employment history. 

Orientation session leaders were instructed to provide assistance in filling out the Application 

Form if explicitly requested to do so by the applicant. However, they were specifically 

instructed not to tell attendees the names of the GATE service provider organizations in order to 

avoid contamination issues. Upon completion of the Application Form, the applicant mailed it to 

the evaluation contractor. 

As intended, the intake process led to some people deciding against participating in Project 

GATE. Even though about 16,000 people registered for Project GATE, only 37 percent (about 

6,000) attended an orientation. This large drop-off between registration and orientation likely 

reflected the small investment in time required to register compared to attending an orientation. 

It is possible that making the Orientation easier to complete, for example by making it available 
Evaluation of Project GATE 34 December 2009

online, would have resulted in a higher attendance rate at the Orientation. However, by 

presenting the Orientation at in-person meetings, Project GATE could ensure more uniformity of 

the message conveyed during Orientation. 

Of those who attended an orientation, 71 percent (about 4,200) chose to apply to Project GATE.

3.4 Outreach and Recruitment

Many new programs find it challenging to spark interest among their target populations, develop 

a reputation within their communities, and achieve a steady enrollment. As a new initiative and 

one that included recruitment for a control group, Project GATE required significant outreach 

efforts to recruit and enroll sufficient numbers of sample members to support the study’s 

experimental design. While general outreach strategies were initiated at all sites, the types and 

intensity of recruitment efforts were driven by each site’s success in meeting its enrollment 

target.13

One-Stop Career Centers were the foundation of the GATE outreach strategy. These centers 

offer a wide range of services for job seekers and employers but are not traditionally viewed as a 

resource for self-employment services. Project GATE aimed to attract new and more diverse 

customers to the One-Stop system. Twenty One-Stop Career Centers participated in GATE; the 

number per site ranged from two in northeast Minnesota to seven in Pittsburgh (see Table III.3). 

The centers were chosen for the demonstration based on three general criteria. First, larger 

centers were generally selected so that they could reach a larger population. Second, some 

centers were selected to ensure diversity among clients. Third, centers were selected only if their 

managers wanted to offer Project GATE services.

 

13 For a detailed description of outreach efforts in Project GATE, see Bellotti et al. (2006).
Evaluation of Project GATE 35 December 2009

Table III.3: One-Stop Career Centers Participating in Project GATE

Site Number of 

Participating 

Centers 

Names of One-Stop Career Centers

Participating in Project GATE

Minneapolis 

/St. Paul 4

North Minneapolis WorkForce Center

Anoka County WorkForce Center

Midway WorkForce Center

Dakota County North WorkForce Center

Northeast 

Minnesota 2

Duluth WorkForce Center

Virginia WorkForce Center

Philadelphia 5

North Philadelphia CareerLink Center

Northeast Philadelphia CareerLink Center

Northwest Philadelphia CareerLink Center

South Philadelphia CareerLink Center

Calle Americana CareerLink Center

Pittsburgh 7

Pittsburgh/Allegheny County Comprehensive CareerLink Center

McKeesport Comprehensive CareerLink Center

Allegheny West Comprehensive CareerLink Center

Community CareerLink at the Jewish Family and Children’s 

Services Career and Development Center

Community CareerLink at the Community College of Allegheny 

County, South Campus

Community CareerLink at the Community College of Allegheny 

County, North Campus

Community CareerLink at the Community College at the Forbes 

Road Career and Technology Center

Maine 3

Portland Career Center

Lewiston Career Center

Bangor Career Center

All participating One-Stop Career Centers provided information about Project GATE through 

electronic kiosks, flyers, brochures, and posters. These outreach materials promoted the Project 

GATE website. Many centers also conducted open-house events for individuals interested in 

self-employment, mentioned Project GATE in their general orientations, and hosted Project 

GATE booths at job fairs. One-Stop Career Center employment counselors also occasionally 

suggested that customers who seemed well suited to self-employment attend a Project GATE 

orientation.
Evaluation of Project GATE 36 December 2009

In addition to promoting Project GATE at the One-Stop Career Centers, further outreach was 

conducted in most sites (see Table III.4). Flyers describing Project GATE were periodically 

mailed with UI benefit checks in Philadelphia, Pittsburgh, and Maine. Staff at some 

participating One-Stop Career Centers led grassroots networking efforts to share information 

about the program with other local organizations and government agencies. Finally, mass media 

marketing—including special media events, advertisements, press releases, and public service 

announcements—was used across sites in varying degrees to increase the program’s visibility. 

The resources spent on marketing varied, depending on the success of other outreach strategies; 

for example, Philadelphia required the largest marketing budget, which was more than twice that 

spent in Minneapolis/St. Paul.

Table III.4: Summary of GATE Outreach Strategies by Site

Minneapolis

/St. Paul

Northeast 

Minnesota Philadelphia Pittsburgh Maine

One-Stop Promotional 

Efforts

 Number of GATE kiosks 4 2 5 3 3

 Open-house events No No Yes No Yes

 Booths at job fairs No Yes Yes Yes No

Flyers Inserted with UI 

Checks No No a Yes a Yes Yes

GATE Website National

Grassroots 

Campaigning Yes Yes Yes Yes Yes

Mass Media Marketing

 Date of kickoff event Aug 2002 Aug 2004 Jun 2004 Feb 2004 None

 Paid advertising No Yes Yes Yes Yes

 Type of organization

 leading marketing 

effort

One-Stop 

operator

One-Stop 

operator Private firm One-Stop operator

Private 

firm

Budget $19,197 $13,211 $51,355 $39,515 $34,303 a The state UI agency in Minnesota was unable to send inserts only to those individuals residing within the two 

Minnesota sites.
Evaluation of Project GATE 37 December 2009

One-Stop Career Centers were the single most important source for prospective GATE sample 

members, drawing about 37 percent of orientation attendees; however, other outreach strategies 

also attracted substantial numbers of applicants (see Table III.5). The GATE website was a 

particularly effective recruiting tool given its comparatively low cost), yielding 12 percent of 

orientation attendees. Referrals from local agencies drew about 13 percent of orientation 

attendees, and advertising drew about 12 percent. As Project GATE matured, its reputation 

spread, and about 23 percent of orientation attendees reported hearing about the program through 

friends, relatives, business partners, and acquaintances. 

Table III.5: How Orientation Attendees Heard About Project GATE

Minneapolis/

St. Paul

Northeast 

Minnesota Philadelphia Pittsburgh Maine Total

At a One-Stop

Career Center

40% 58% 28% 36% 37% 37%

Insert with UI 

check

0 0 5 7 6 3

GATE website 14 13 10 12 9 12

Community 

agency

16 6 8 11 16 13

Advertisements 6 6 23 16 10 12

Word of mouth 24 20 27 18 19 23

Other 8 9 7 9 10 8

Number of 

Orientation 

Forms

2,272 a281 1,430 784 834 5,601

Source: Project GATE orientation forms.

Note: Percentages do not add to 100 because respondents were allowed to mark all that apply. Where multiple 

responses were marked, orientation attendees were not asked to rank the effectiveness of the techniques.

a 

3.5 Services Offered

Of the 5,927 who attended an orientation, 5,601 completed an orientation form.

To help build the business knowledge of individuals interested in creating, sustaining or 

expanding small businesses, Project GATE, as previously noted, offered three basic services: (1) 
Evaluation of Project GATE 38 December 2009

an assessment, (2) classroom training, and (3) one-on-one business counseling. None of these 

services was required; each member of the program group was given a choice to select which (if 

any) services to receive. To receive classroom training or one-on-one business counseling, 

however, a program group member was required to meet with a counselor for an initial needs 

assessment.

The vast majority (90 percent) of GATE program group members received some services from 

GATE providers. About two-fifths (42 percent) received both training and business counseling, 

while 21 percent received business counseling but no training, and 13 percent received only 

training (see Figure III.2). About one-quarter (24 percent) received neither training nor business 

counseling. Those GATE participants who received an assessment received about 15 hours of 

services, on average.

Figure III.2: Receipt of Service Among Program Group Members

 Source: Project GATE Participant Tracking System
Evaluation of Project GATE 39 December 2009

The length of time spent in Project GATE varied across participants. While 17 percent of GATE 

participants who received an assessment spent less than one month in Project GATE, 5 percent 

spent one year or more. GATE participants who received an assessment spent four months in the 

program, on average.

3.5.1 The Assessment: Tailoring Services to Participants’ Needs

As businesses are diverse, so are the needs and goals of aspiring entrepreneurs. The GATE 

assessment, the first service provided by the program, was designed to ensure that the services a 

participant received were tailored to his or her individual needs. This assessment was conducted 

during a counseling session where the GATE participant met one-on-one with an experienced 

business counselor. The GATE assessment had two key goals: (1) to provide a professional 

appraisal of an individual participant’s needs, and (2) in all but one site, to make a referral of that 

individual to the most appropriate GATE provider. 

The infrastructure of GATE providers played a role in shaping the objectives of the sessions at 

each site (see Table III.6). In particular, the sites varied in their referral procedures. In 

Pittsburgh, the SBDC was the only organization that provided GATE services—including 

assessments, training, and business counseling—and, therefore, referrals were not needed. In 

Maine, the SBDC conducted the assessment and provided business counseling, and referrals 

were made only for classroom training. At all other sites, individuals were referred to a single 

provider to receive classroom training, business counseling, or both.

The assessment often resembled a first business counseling session. Counselors typically held a 

semi-structured discussion on topics such as the business idea, prior experience relevant to the 

business, credit history and availability of equity and collateral, ability of the participants to 

support themselves while starting a business, and other barriers. While GATE providers were 

instructed not to deny participants’ services based on their business ideas or suitability for selfemployment, most providers did give participants frank assessments of their ability to pursue 

entrepreneurship and in some cases discouraged GATE participants whom they believed would 

not succeed.
Evaluation of Project GATE 40 December 2009

Table III.6: Summary of GATE Infrastructure at Each Site

Site Assessment 

Provider

Services Provided 

by Assessment 

Provider

Services Offered 

by Other GATE 

Providers

Referrals 

Made to 

Single or 

Multiple 

Providers

Philadelphia IMPAQ 

International None

Training and 

business 

counseling

Single

Pittsburgh SBDC Training and 

business counseling No other providers Not applicable

Minneapolis/St. Paul SBDC Training and 

business counseling

Training and 

business 

counseling

Single

Northeast Minnesota SBDC Training and 

business counseling

Training and 

business 

counseling

Single

Maine SBDC Business 

counseling Training Multiple

Four main factors influenced the decision on where to refer clients. First, assessors often 

referred participants with vague business ideas or little experience to providers that offered 

introductory training. Second, the location of services was described as an important factor in 

the rural areas of northeast Minnesota and Maine and the inner city of Philadelphia. Third, given 

that some training courses ran for several months, assessors tried to minimize wait times by 

referring participants to providers that were about to begin a new training series. Fourth, the 

need for credit repair courses—which were scarce—sometimes affected the choice of provider.

3.5.2 Classroom Training: Building the Framework for New Businesses 

Across all GATE sites, the program offered a total of 54 different training programs. Some sites 

offered several types of training to meet different needs, depending on the education and 
Evaluation of Project GATE 41 December 2009

experience of participants, the stage of business development, and the types of businesses they 

wanted to start. The courses offered included:

• General Introductory Courses – These were designed for people who had not yet 

operated a business and might not even have a clear idea for a business. Their 

purpose was to provide an overview of what being an entrepreneur entails. The 

training might touch on subjects such as legal structure, business plans, and 

marketing. These courses tended to be short, varying from one to five sessions.

• General Intermediate Courses – These were designed for people who knew they 

wanted to start a business, had an idea of the type of business they wanted, but had 

not yet completed a business plan. These programs usually lasted 10 to 12 weeks 

and ran for 2 or 3 hours per week. In total, they were about 30 hours in length, 

although some could be as long as 60 hours. 

• General Advanced Courses – These were designed for people who had already 

started a small business but wanted it to grow. In these classes, more advanced 

material was presented on each topic than in the introductory courses. Additional

topics might also be covered, such as how to manage growth in a business or how to 

deal with legal and personnel issues. Sometimes, there was a prerequisite that the 

business achieve a certain size before a participant could attend an advanced course. 

• Specialized Courses – Many providers also offered specialized training programs 

that focused on using the Internet for business, learning computer programs useful to 

business owners (such as the small business accounting software, QuickBooks), or 

assisting with specific types of businesses (such as starting a child care business).

The training programs were generally the same programs the providers had offered prior to 

Project GATE. As a result, the number and variety of programs offered by a particular site 

varied considerably and reflected the availability of programs in the local markets. To 

accommodate the increased demand resulting from participants in Project GATE, however, the 

training courses were sometimes offered at additional locations or more frequently. Several 
Evaluation of Project GATE 42 December 2009

providers also adapted the curricula to the needs of GATE participants; for example, some added 

training components on credit repair.

3.5.3 Business Counseling 

In addition to classroom training, members of the GATE program group were offered business 

counseling in the form of one-on-one counseling sessions. In these sessions, participants were 

provided access to experienced business counselors who could offer advice and guidance on all 

aspects of creating, sustaining or expanding a small business. 

3.6 Participant Tracking System

To track individuals through the stages of Project GATE, a Web-based data collection system 

called the Participant Tracking System (PTS) was developed. This system received input from 

individuals registering for the project, orientation session leaders, data entry staff processing the 

completed paper Application Forms, assessment counselors, and service provider staff. The PTS 

provided output in the form of management and monitoring reports to provide project managers 

with insights into the project status and recent trends in enrollment and participation. Also, the 

Application Form data were used as baseline data on all applicants.

3.7 Conclusion

This chapter has presented details about the implementation of Project GATE in the individual 

sites. Key findings are: 

• Project GATE was implemented successfully across a variety of sites, suggesting 

that it could be replicated on a wider scale. 

• GATE outreach needed to go beyond the One-Stop Career Centers to meet the 

enrollment targets. In some sites, a mass media campaign was necessary. 

• GATE service providers and the training offered varied both within and between 

sites. While some sites offered a wide range of training courses, the choice was more 

limited in others. CBO and SBDC providers in each site provided different services.
Evaluation of Project GATE 43 December 2009

• About 90 percent of all GATE program group members received an assessment and 

about 75 percent received training, business counseling, or both. 

The next chapter reviews the impact of Project GATE on receipt of self-employment

services, types and hours of services received; amount spent on services; and perception of 

their usefulness.
Evaluation of Project GATE 44 December 2009

CHAPTER IV. 

RECEIPT OF SELF-EMPLOYMENT SERVICES

Project GATE service providers offered GATE participants’ classroom instruction on starting or 

growing a business and the opportunity to receive counseling from trained business counselors. 

This chapter examines the impact of Project GATE on the types and amount of self-employment 

services received. 

The chapter first describes the services offered by Project GATE as well as the services available 

to the control group; it then describes the estimated impacts on the total receipt of selfemployment services during the follow-up period (taking into account that program group 

members could also receive non-GATE self-employment services). Types of services received, 

service providers, number of hours of services received, and amount spent on services are then 

described. The chapter ends with a discussion of the survey respondents’ assessment of the 

usefulness of the services they received.

4.1 Services Available to Program and Control Group Members

Project GATE offered program group members three main types of services: (1) assessment, (2) 

classroom instruction, and (3) business counseling. Program group members received these 

services free of charge from a GATE provider. As described in Chapter III, soon after being 

randomly assigned to the program group, participants received a letter asking them to set up an 

appointment with a GATE assessment counselor. During the assessment, the counselor 

determined the participant’s need for services and the most appropriate GATE provider (in 

Pittsburgh there was only one provider). The assessment counselor would then make a referral 

and notify the provider of the referral. 

While training and business counseling are the two most commonly offered self-employment 

services, other forms of self-employment services were sometimes available. Both GATE 

providers and providers that did not participate in the demonstration would sometimes offer 

additional services such as: 
Evaluation of Project GATE 45 December 2009

• Mentoring – Some organizations link a new entrepreneur with an experienced 

businessperson. This differs from business counseling in that the mentor is a 

volunteer, not a professional business counselor. The SCORE (SCORE), for 

example, links new entrepreneurs with volunteer retired business executives.

• Peer Support or Networking – Some providers organize meetings for people 

interested in starting a business so they can give one another advice and support.

• Individual Development Accounts – Individual development accounts, administered 

by nonprofit CBOs, help people save for a specific goal, such as starting a business. 

Participants deposit funds into the accounts, which are matched by the CBO. 

Participants can withdraw funds from the accounts to start or grow a business or for 

other specific goals.

• Business Incubators – Some providers offer low-cost space with subsidized 

overhead costs (incubators) for start-up businesses for a limited period of time.

• Credit Repair – Some organizations provide classes on becoming credit worthy, 

including repairing bad credit histories and personal financial management. 

• Business Libraries – Providers often have business libraries that house the 

information necessary to conduct market research. Some providers also provide 

access to online business library services, such as HillSearch.14

Table IV.1 lists self-employment service providers at each site during the demonstration; the 

GATE providers are indicated with an asterisk. This list, which may not be exhaustive, includes

all the providers identified from discussions with One-Stop Career Center staff, discussions with 

other self-employment service providers at each site, an Internet search, and a directory of U.S. 

self-employment programs compiled by the Aspen Institute (Walker and Blair 2002). Some 

providers were not asked to participate in Project GATE, usually because they did not have the 

ability to provide both business counseling and classroom training. 

 

 

14 http://www.hillsearch.org. 
Evaluation of Project GATE 46 December 2009

Table IV.1: Programs That Provide Self-Employment Services at GATE Sites during the 

GATE Demonstration

Site SBA-Affiliated 

Programs Community-Based Organizations and Others

Philadelphia, 

PA

Temple 

University

Wharton School 

of Business

Women’s Business Development Center (WBDC)*

Women’s Opportunity Resource Center (WORC)*

The Enterprise Center*

Philadelphia Minority Business Development Corporation

Ben Franklin Technology Partners of Southeastern 

Pennsylvania

Philadelphia Commercial Development Corporation

Philadelphia Development Partnership

Technical Assistants

Community College of Philadelphia

Pittsburgh, PA

Duquesne 

University*

University of 

Pittsburgh

SCORE

Microenterprise Training Program

Northside Community Development Fund

McKeesport CareerLink Center

Minneapolis/St

. Paul, MN

University of St. 

Thomas*

SCORE

WomenVenture*

Hmong American Mutual Assistance Association 

(HAMAA)*

Neighborhood Development Center Inc.

Phillips Community Development Corporation

Whittier Community Development Corporation

Community Action of Minneapolis

Metropolitan Economic Development Association

Microenterprise Grant Program

Minneapolis Consortium of Community Developers

Southeastern Minnesota Microenterprise Fund

Northeast 

Minnesota

University of 

Minnesota at 

Duluth*

Northeast Entrepreneur Fund (NEEF)*

Maine

University of 

Southern Maine*

SCORE

Maine Centers for Women, Work, and Community 

(WWC)*

Penquis Community Action Program (CAP)*

Coastal Enterprises, Inc. (CEI)*

Center for Entrepreneurship at the University of Southern 

Maine and the Heart of Maine*

*Participated in Project GATE.
Evaluation of Project GATE 47 December 2009

Although at least one SBDC and one CBO offered self-employment services in each site, the 

number of providers varied considerably. The most providers were identified in the large 

cities—Minneapolis/St. Paul and Philadelphia. Northeast Minnesota had the fewest providers. 

SCORE had chapters in Pittsburgh, Minneapolis/St. Paul, and Maine, but not in Philadelphia or 

northeast Minnesota.

Two GATE sites—Pennsylvania and Maine—operated the SEA program prior to and during 

Project GATE. The SEA program provides free self-employment training and business 

counseling from providers in the community to UI recipients. The programs in Pennsylvania and 

Maine were small—fewer than 100 SEA participants annually in Philadelphia and Pittsburgh and 

100 to 200 in Maine. Persons eligible for SEA were also eligible for Project GATE and could 

participate in SEA, GATE, or both. In Pennsylvania, relatively few GATE applicants were also 

eligible for SEA. In Maine, about one-quarter of GATE applicants were accepted into the SEA 

program. Eligibility for SEA was unaffected by random assignment—both program and control 

group members could participate.

In addition to being offered GATE services, as noted, program group members might also be 

offered additional services, from both GATE providers and providers not in the demonstration, if 

they met the eligibility requirements and paid any required fees. 

Control group members could not participate in Project GATE, but they could receive training 

and business counseling or other self-employment services in the community. They could 

receive these from any provider, irrespective of whether the provider participated in Project 

GATE. 

However, the services offered to GATE participants differed from the services that control group 

members could receive in five important ways. Specifically, GATE participants were:

• Provided Assistance Finding Services – The letter notifying program group 

members that they were eligible for Project GATE included the name and telephone 

number of an assessment counselor. The assessment counselors were also notified of 

the assignments, and if they did not hear from a participant, they would call the 

participant to schedule the assessment. In contrast, control group members were told 
Evaluation of Project GATE 48 December 2009

they were not eligible for Project GATE and were not given the names of any service 

providers. Prior to random assignment, neither program nor control group members 

were given names of providers.

• Provided an Assessment of their Needs – Program group members received an 

assessment of their needs and a referral to the most appropriate GATE service 

provider. Control group members might also find a service provider who would 

assess their needs. But, due to competition between providers for clients and 

funding, the assessor would have been unlikely to refer the control group member to 

any other organization.

• Provided Services Free of Charge – Program group members did not pay for their 

assessment, training, or business counseling. Control group members were likely to

have been charged for these services. Most providers usually charged for training 

and business counseling to people not in Project GATE, though the charges would 

typically be on a sliding scale and would not cover all the costs. SBDCs were the 

exception; they always provide business counseling (though not training) free of 

charge.

• Never Refused Services – Program group members could not be denied GATE 

services for any reason. In contrast, some providers would screen out (i.e., deny 

services to) non-GATE clients who they thought would not succeed in their business 

endeavors.

• Given Preference for Services – GATE providers would give priority to GATE 

program group members in filling slots for a class or assigning a business counselor. 

The control group was designed to represent the counterfactual—what would have happened to 

program group members in the absence of Project GATE. However, the experiences of control 

group members may have differed from what their experiences would have been in the absence 

of Project GATE in three ways, any of which could bias the impact results:

• Increased Capacity – Some providers used the GATE funds to add classes. These 

were usually classes that they had provided previously. With the GATE funds, 
Evaluation of Project GATE 49 December 2009

however, they were able to provide classes more frequently and/or in additional 

locations. To the extent that GATE participants did not fill these classes, the new 

classes increased the availability of services to control group members. This would 

imply that control group members would receive more services than they would have 

in the absence of Project GATE, resulting in downwardly biased impact estimates on 

service receipt due to GATE.

• Crowding Out – Conversely, some GATE providers did not hire new staff and did 

not increase their total service capacity because of Project GATE. Program group 

members were given priority for program slots. But if the provider had no excess 

capacity, program group members may have taken slots that in the absence of Project 

GATE would have been available for control group members. This would imply that 

control group members would receive fewer services than they would have in the 

absence of Project GATE, and impact estimates on service receipt due to GATE 

would be upwardly biased. 

• Contamination – One-Stop Career Staff were asked not to provide the names of any 

GATE service provider (or any other provider) to control group members. However, 

some control group members may have learned about the availability of services at 

GATE providers from program group members they knew or had met earlier during 

the orientation. This would imply that control group members would receive more 

services than they would have in the absence of Project GATE, and impact estimates 

on service receipt would be downwardly biased.

For the most part, control group members’ experiences do approximate what their experiences 

would have been in the absence of Project GATE and these potential sources of bias are thus 

relatively small. The most likely causes are (1) a slight downward bias in Maine, where

providers increased their capacity to provide classes and most attendees at the new classes were 

not GATE participants; and (2) a slight upward bias in Minneapolis/St. Paul where providers 

served the most GATE participants and some providers noted that there were waiting lists for 

services. 
Evaluation of Project GATE 50 December 2009

As described above in Section 2.2.4, contamination becomes an issue among control group 

members who were business partners with program group members. To eliminate this problem 

from the analysis, the 2.9 percent of our original sample of 4,198 applicants who were in mixed 

program/control group business partnerships were removed from the sample prior to analysis. 

The sample was further restricted in the analysis of Wave 3 survey data to include only 

individuals who completed all three survey waves. There were 2,450 such individuals, 

consisting of 1,274 Program group members and 1,176 Control group members. 

4.2 Receipt of Any Self-Employment Services

Figure IV.1: Impacts on Receipt of Self-Employment Services

 Source: Follow-up surveys, Waves 1, 2, and 3.

 */**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Project GATE substantially increased the likelihood of receiving self-employment 

services. [Figure IV.1]
Evaluation of Project GATE 51 December 2009

As indicated in Figure IV.1, 88 percent of program group members reported receiving some selfemployment services by the time of the Wave 1 survey. The receipt of at least some selfemployment services increased to 92 percent by Wave 3. Thus, during the 60-month observation 

period, nearly all program group members received at least some self-employment services. In 

contrast, the percentage of control group members was only 60 percent by Wave 1, growing to 

78 percent by Wave 3. Thus, GATE had a significant impact on receipt of self-employment

services, at each of the three waves of the survey. An analysis of receipt of self-employment 

services by site and service type (not shown) reveals that a positive program-control differential 

was evident in all sites and across all types of services.

A substantial percentage of control group members sought out self-employment services on their 

own; this percentage increased substantially over time. Nonetheless, receipt of self-employment 

services by control group members lagged that of the program group in level and timing. 

Additional details on the receipt of self-employment services are presented in Table IV.2. 
Evaluation of Project GATE 52 December 2009

Table IV.2: Impacts on Receipt of Self-Employment Services

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Any Self-Employment Services

Between random assignment and Wave 1 survey 88% 60% 28 ***

Between random assignment and Wave 2 survey 91 72 19 ***

Between random assignment and Wave 3 survey 92 78 14 ***

Any Classes, Workshops, or Seminars

Between random assignment and Wave 1 survey 68 40 29 ***

Between random assignment and Wave 2 survey 75 53 22 ***

Between random assignment and Wave 3 survey 77 59 18 ***

Any One-on-One Business Counseling

Between random assignment and Wave 1 survey 55 21 34 ***

Between random assignment and Wave 2 survey 61 29 31 ***

Between random assignment and Wave 3 survey 63 34 29 ***

Any Peer Support/Networking

Between random assignment and Wave 1 survey 15 11 5 ***

Between random assignment and Wave 2 survey 23 17 6 ***

Between random assignment and Wave 3 survey 27 22 5 ***

Any Other Self-Employment Services

Between random assignment and Wave 1 survey 7 6 2 *

Between random assignment and Wave 2 survey 10 8 2 **

Between random assignment and Wave 3 survey 13 10 3 **

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Numbers may not add to 100% due to rounding.
Evaluation of Project GATE 53 December 2009

4.3 Hours of Services Received 

Figure IV.2: Impacts on Hours of Self-Employment Services Received

Source: Follow-up surveys, Waves 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

As indicated in Figure IV.2, self-employment service hours increased over time for both program 

and control group members. But program group members received more self-employment 

service hours than control group members at every survey wave. The difference in hours 

persisted and was statistically significant throughout the observation period. 

The Wave 3 survey instrument asked about receipt of self-employment services over the 12 

months prior to the survey. Because the Wave 3 survey was administered several years after the 

Wave 2 survey, there is a gap of about two years, immediately after the Wave 2 survey, when we 

do not know the hours of self-employment services received by the respondents. Thus, the label 

“Between random assignment and Wave 3 survey” must be interpreted with this caveat in mind.

Project GATE substantially increased the number of hours of self-employment 

services received. [Figure IV.2]
Evaluation of Project GATE 54 December 2009

Averaging over all participants (where those who did not receive services are considered to have 

received 0 hours of service), GATE program group members received an average of about 47 

hours of services between random assignment and Wave 3. By contrast, control group members 

received an average of about 40 hours of service. The difference in service hours was 

statistically significant at the 5 percent level. 

Additional details on hours by type of service are presented in Table IV.3. The impact of GATE 

was strongest for receipt of classroom training and receipt of individual counseling. GATE had 

no impact on receipt of mentoring services. 

Table IV.3: Impacts on Hours of Self-Employment Services Received

Outcome

Program 

Group

Mean

Control 

Group

Mean

Impact on All 

Eligible 

Applicants

Total

Between random assignment and Wave 1 survey 23% 14% 8 ***

Between random assignment and Wave 2 survey 37 28 9 ***

Between random assignment and Wave 3 survey 47 40 7 **

Classes, workshops, or seminars

Between random assignment and Wave 1 survey 15 7 8 ***

Between random assignment and Wave 2 survey 22 14 7 ***

Between random assignment and Wave 3 survey 26 20 6 ***

One-on-one counseling/business counseling

Between random assignment and Wave 1 survey 2 1 1 ***

Between random assignment and Wave 2 survey 3 1 1 ***

Between random assignment and Wave 3 survey 3 2 1 ***

Peer support/networking

Between random assignment and Wave 1 survey 2 1 1 **

Between random assignment and Wave 2 survey 3 2 1 *

Between random assignment and Wave 3 survey 4 3 1

Number of Respondents 1274 1176 2450

Source: Follow-up surveys, Waves 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 55 December 2009

4.4 Amount Spent on Services

Figure IV.3: Amount Spent on Self-Employment Services between Random Assignment 

and the Wave 3 Follow-up

Source: Follow-up survey waves 1, 2, and 3

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

While Project GATE offered services free of charge, many other providers charged for services. 

On average, members of the program group spent $356 on self-employment services (other than 

GATE services) during the follow-up period compared with $402 spent by members of the 

control group (see Figure IV.3). These are means taken over all members of the program and 

control groups, including those who received no services. 

Note that in Figure IV.3, the totals for spending on self-employment services exclude services 

received during the time interval from the Wave 2 survey to 12 months prior to the Wave 3 

survey, approximately 2 years, on average. This is because, as noted, the Wave 3 survey asked 

respondents about their spending on self-employment services only during the 12 months 

immediately prior to the Wave 3 survey. 

Project GATE had no impact on total spending for self-employment services over the 

four-year study period. [Figure IV.3]
Evaluation of Project GATE 56 December 2009

An examination of spending for self-employment services between random assignment and each 

of the three waves of the follow-up survey reveals that Project GATE had an impact on that

spending only between random assignment and Wave 1. During this period, program group 

members spent $90, on average, less than the $169 for Control group members, with the $79 

difference statistically significant at the 1 percent level. This is not surprising, since a major 

feature of Project GATE was the offer of free self-employment services to program group 

members. Since the services were tailored to each individual’s needs, it is not surprising that 

program group members did not supplement their GATE entrepreneurial training with additional 

spending on self-employment services during the first 6 months or so of their GATE tenure.

4.5 Perceptions of Service Usefulness

Survey respondents who received self-employment services were asked in each survey about the 

perceived usefulness of the services received. In the earlier report (data from the Wave 1 and 

Wave 2 surveys) Project GATE participants were described as much more likely than control 

group members to respond that the self-employment services they received were “very useful.” 

About 52 percent of program group members viewed the services as “very useful,” compared to

36 percent of control group members, a statistically significant difference. Conversely, control 

group members were more likely to report the services were “not at all useful.” Among program 

group members, only 6 percent of the program group reported that the services they received 

were “not at all useful,” compared to 14 percent of the control group. 

In the Wave 3 survey we found no difference in perceptions regarding the usefulness of selfemployment received during the preceding 12 months (see Table IV.4). Self-employment 

services received in this time period are no longer related to GATE, and are thus likely to be 

similar for Program and Control group members. 
Evaluation of Project GATE 57 December 2009

Table IV.4: Perceptions of Usefulness of Services at the Wave 3 Follow-up

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Differences

Perceived Usefulness of Servicesa

Very useful 45% 41% 4

Somewhat useful 40 40 0

Not very useful 7 9 -2

Not at all useful 8 10 -2

Ways Services Viewed as Helping “A Lot” or 

“Somewhat”b

Developing a business plan 65 59 6 *

Deciding whether to pursue self-employment 66 60 6 **

Refining a business idea 76 67 9 ***

Developing a marketing strategy 69 67 2

Networking 74 72 2

Dealing with accounting issues 47 45 3

Dealing with legal issues 46 44 2

Dealing with clients 63 62 1

Providing psychological support 51 46 5

Dealing with credit issues 37 33 4

Using computers and technology 52 49 3

Hiring and dealing with employees 35 34 1

Applying for loans 25 23 2

 Were There Other Services Would Have Liked to 

Receive 50 56 -5 **

Types of Services Would Have Liked to Receivec

 Classroom Training 16 20 -4

 Business counseling 25 28 -2

 Peer Support/Networking 13 16 -3

 Mentoring 21 20 1

 Loans/Finance/Credit 28 33 -5 *

 Other 51 52 0

Source: Wave 3 follow-up survey.

Notes: Reported means and differences are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. 

a Means computed using only the 1,000 sample members who reported receiving services. 

b Means computed using only the 951 sample members who reported that the services they received helped “a lot” 

or “somewhat.” 

c Means computed using only the 1,303 sample members who reported that they would have liked to receive other 

services.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 58 December 2009

4.6 Conclusion

This chapter has examined the impact of Project GATE on the types and amount of selfemployment services received by nascent entrepreneurs. Key findings are: 

• About 92 percent of the program group received some self-employment services 

during the follow-up period compared to about 78 percent of the control group.

• During the follow-up period, Project GATE participants received 7 more hours of 

service than control group members. 

• GATE participants spent on average $131 less of their own funds than control group 

members on self-employment training services.

• GATE participants were more likely than control group members to report that they 

found the services they received to be useful.

The following chapter addresses whether Project GATE increased business ownership. It 

discusses business ownership; impacts on business preparation and start-up attempts; impacts on 

business openings and closures; number of businesses owned; business size; earnings from 

businesses; differences in the types of businesses developed; and challenges to starting a 

business.
Evaluation of Project GATE 59 December 2009

CHAPTER V.

BUSINESS OWNERSHIP

A key goal of the Project GATE demonstration was to impart business knowledge, 

entrepreneurial skills, and access to resources that could help participants achieve their goal of 

self-employment. Chapter IV presented evidence that Project GATE led to a modest increase in 

the receipt of training, business counseling, and other self-employment services. This chapter 

presents estimates of the impacts of receiving these additional services on business ownership 

and business earnings. 

Specifically, this chapter presents the impacts on business ownership among the entire GATE 

sample as well as the impact by site and by subgroup. Special attention is paid to the subgroup 

of GATE applicants who were receiving Unemployment Insurance (UI) benefits at application.

The chapter continues with a discussion of impacts on the number of businesses owned, business 

openings and closures, business size, time to start of business, business longevity, and business 

earnings. The chapter then describes differences in the types of businesses developed by 

program and control group members. Finally, the chapter reviews challenges that program and 

control group members faced while pursuing self-employment. 

5.1 Business Ownership

This section addresses the impact of Project GATE on business ownership over time. The 

section also reviews impacts across demonstration sites and across key subgroups. 
Evaluation of Project GATE 60 December 2009

5.1.1 Overall Impacts on Business Ownership

Figure V.1: Business Ownership Rate at Wave 1, 2, and 3

Source: Follow-up surveys, Wave 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the 

program and control group members in baseline characteristics. Estimates were obtained using weights 

to adjust for differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

At random assignment, both program and control groups started out with similar percentages of 

business owners.15

 

15 Throughout the report, we use “at random assignment” and “at the time of application” interchangeably since they 

occurred almost simultaneously. Typically, applicants were randomly assigned within a few days of their 

application.

 As indicated in Figure V.1, approximately 1 out of 5 GATE applicants 

Project GATE had a positive impact on business ownership in the initial quarters 

after random assignment. [Figure V.1]
Evaluation of Project GATE 61 December 2009

already owned a business at random assignment (21 percent of the program group and 20 percent 

of the control group). Most likely, these business owners applied to Project GATE in order to 

learn how to grow their existing business or to develop a new business. By the time of the Wave 

1 survey (approximately 6 months after random assignment), the percentage of business owners 

among the program group had more than doubled -- to 44 percent.16

At Wave 2 (approximately 12 months later), the program group percentage of business owners 

remained at 44 percent; control group members’ business ownership percentage increased to 41 

percent. The 3 percentage point difference at Wave 2 is not statistically significant. Similarly, at 

Wave 3 (approximately 60 months after random assignment), the difference between the two 

groups is not statistically significant. In fact, the percentage of business ownership for both 

groups declined to 38 percent by Wave 3. These results suggest that Project GATE only 

increased business ownership early in the follow-up period. After this initial period, control 

group members caught up with the program group in percentage of business ownership, 

eliminating any difference between the two groups.

 The business ownership 

percentage for the control group had also increased dramatically -- to 38 percent. This difference 

of 6 percentage points between the program and control groups is statistically significant at the 1 

percent level. 

Figure V.2 presents business ownership by quarter.17 Project GATE had a positive impact of 3 

to 5 percentage points on the likelihood of business ownership during the first four quarters after 

random assignment. Both the program group and the control group experienced a steep growth 

in business ownership during the first three quarters after random assignment. By the end of the 

first quarter, the program group had nearly doubled its rate of business ownership to 37 percent; 

the rate climbed further to 46 percent by the end of the sixth quarter (or 18 months) after random 

assignment. 

 

16 Business ownership at each survey wave is defined as: business that is operating at the time of the survey.

17 Business ownership in a quarter is defined as: business that is operating during the specific quarter.
Evaluation of Project GATE 62 December 2009

Figure V.2: Business Ownership by Quarter

Source: Follow-up surveys, Wave 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level. 

The rapid growth and statistically significant impacts of GATE on business ownership in the first 

few quarters after random assignment were likely caused by two related factors. First, the main 

provision of GATE services occurred within the first few months after random assignment. 

Following acceptance into Project GATE, many program group members quickly enrolled in 

services and almost immediately began work on their businesses. The initial push from Project 

GATE services likely sparked the large surge in business ownership among program group 

members.

Second, among control group members, there was also a rapid surge in business ownership 

following random assignment. But the increase in business ownership among the control group

lagged behind the program group. The slower growth rate for the control group may be due to 

the fact that control group members either chose to pursue their business ideas without assistance 

or they found other self-employment assistance services with some delay. As discussed in 

Chapter IV, many control group members eventually found self-employment services on their 
Evaluation of Project GATE 63 December 2009

own. As a result of these two factors, control group members started their business with some 

delay. Ultimately, however, they began to close the gap in business ownership rates with their 

program group counterparts after the first few quarters following random assignment.

A careful examination of Figure V.2 reveals an interesting anomaly; that is, the percentage of 

business ownership fell precipitously for both program and control group members between 

quarter 6 and quarter 7. Inasmuch as this precipitous drop coincided with the timing of the Wave 

2 survey, we investigated this phenomenon in detail. Our conclusion is that the drop is due to 

what is known as the “seam effect.”18 The seam effect is a well-known phenomenon associated 

with longitudinal surveys; a disproportionate number of changes in a respondent’s status are 

reported (or inferred to have taken place) at the ‘seam’ between the end of the reference period 

for Wave t and the start of the reference period for Wave t+1 of a panel survey.19

Close analysis of the data reveals that this phenomenon is due to recall error. That is, the Wave 

3 questionnaire included the following question: “since the last survey interview, have you been 

self-employed.” Because the Wave 3 survey was conducted approximately 31⁄2 years after the 

Wave 2 survey, a number of people who answered ‘no’ to this question should have answered 

‘yes.’ We reach this conclusion based on the following analysis: 

 

• At Wave 3, a total of 1,238 respondents said they did not own a business at some 

time between Wave 2 and Wave 3. 

• Among these 1,238 respondents who said they did not own a business during this 

period, 196 (or about 16 percent) reported on the Wave 2 survey that they were 

“currently self-employed.” 

 

18 Robert B. Nielsen and Alfred O. Gottschalck “Estimating Employment Transitions in the Presence of a Seam 

Effect,” Applied Economics Research Bulletin Peer-Reviewed Working Paper Series, 2, 1-19 (2009).

19 Peter Lynn, Nicholas Buck, Jonathan Burton, Annette Jäckle, Heather Laurie, A Review of Methodological 

Research Pertinent to Longitudinal Survey Design and Data Collection, ISER Working Papers, Number 2005-29.
Evaluation of Project GATE 64 December 2009

• For the Wave 3 responses to be accurate, 196 individuals would have had to close 

their business on the day of the Wave 2 survey, which is very unlikely. 

Thus, we conclude that 16 percent of the people who said on the Wave 3 survey that they did not 

own a business since Wave 2 actually did own a business for a time after Wave 2. Thus the 

conspicuous “dip” in the graph between quarter 6 and 7 reflects the seam effect.

5.1.2 Impacts by Site

Key elements of the GATE intervention were implemented across all the sites, although the 

exact mix of services offered and the organizations providing those services varied substantially. 

Despite this variation, no significant differences in the impacts on business ownership across the 

participating sites were found. Small sample sizes in some sites, however, make it hard to draw 

strong conclusions from this finding.

As reported in the earlier 18-month report (Benus et al. 2008), the impact on ever owning a 

business within the first 18 months after random assignment was statistically significant. That is, 

over the 18-month period after random assignment, program group members were more likely to 

have owned a business. Moreover, we found that the impact was largest and statistically 

significant (9 percentage points) in Minneapolis/St. Paul. This site also experienced among the 

highest levels of business ownership overall, with 64 percent among program group members 

and 55 percent among control group members owning a business. 

As indicated in Figure V.3, the results for the 60-month follow-up period are quite different. For 

example, the overall difference in business ownership between the program and control group at 

Wave 3 is no longer statistically significant. Specifically, over the 60-month follow-up period, 

63 percent of program group members owned a business compared to 61 percent for the control 

Project GATE had similar impacts on business ownership in all sites. [Figure V.4]
Evaluation of Project GATE 65 December 2009

group. In contrast, at Wave 2, the overall business ownership percentages were 55 percent for 

the program group and 49 percent for the control group. Thus, between Wave 2 and Wave 3, the 

program group percentage increased by 8 percentage points (55 percent to 63 percent) and the 

control group percentage grew by 12 percentage points (49 percent to 61 percent). This result 

reinforces our earlier finding that GATE was significant in promoting business start-up and 

ownership early in the follow-up period. After this initial period, the control group began to 

catch up with the program group, and by the end of the 5-year observation period the two groups 

are similar with respect to business ownership. 

Figure V.3: Impacts on Business Ownership by Site

Source: Follow-up surveys, Wave 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 66 December 2009

Examination of the impact by site also indicates no significant impact differences in any of the 

sites. Whereas there were some site differences in Wave 2, by Wave 3 there were no longer any 

site differences.20

5.1.3 Impacts by Receipt of Unemployment Insurance

 

For a number of reasons, sample members who were receiving UI benefits at random assignment 

are of particular interest to DOL policymakers. First, UI recipients constitute about 42 percent of 

all GATE applicants. Second, DOL’s SEA program provides UI recipients with selfemployment services similar to Project GATE. Third, previous studies have found sizable 

impacts from self-employment assistance programs for UI recipients (Benus et al. 1995). For 

these reasons we focus below on UI recipients. 

The impact on business ownership for those who were receiving and those were not receiving UI 

benefits at random assignment are presented in Figure V.4. As indicated in the figure, the impact 

for the subgroup receiving UI benefits is statistically significant during the early post random 

assignment quarters (Q2-Q6). During this period, the impact ranged between 5 and 9 percentage 

points. For the subgroup that was not receiving UI benefits at random assignment, the impact 

was substantially lower and not statistically significant in any first quarter. In Q2, for example, 

the impact was 8.7 percentage points for those receiving UI benefits (significant at the 1 percent 

level) while the impact was 2.7 percentage points for those not receiving UI benefits (not 

significant). An F-test21

 

20 At Wave 2, the impact of GATE was statistically significant in Minneapolis/St. Paul; the impact in the other sites 

was not significant.

was conducted to test jointly the hypothesis that the two subgroups have 

21 An F-test is used to perform more sophisticated statistical tests of linear restrictions, as opposed to a t-test that 

compares the means of two random variables. Here, there are four groups: male program (mean b1), male control 

Compared to the full sample, GATE had a more substantial impact on business 

ownership among those who were receiving UI benefits at random assignment.

[Figure V.4]
Evaluation of Project GATE 67 December 2009

equal levels of business ownership for all quarters. The hypothesis was rejected at the 5 percent 

level of significance, indicating that the two subgroups have different levels of business 

ownership in at least some of the 16 quarters. Comparing the results in Figure V.4 with the 

results presented earlier for the full sample (Figure V.2), we conclude that the impacts presented 

in Figure V.2 are largely driven by the impacts for the subgroup that received UI benefits at 

random assignment. The subgroup that was not receiving UI benefits reduced the overall impact 

of Project GATE.

Figure V.4: Impacts on Business Ownership For Those Receiving and Those Not Receiving 

UI Benefits at Random Assignment

Source: Follow-up surveys, Wave 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level. 

 

(mean b2), female program (mean b3), female control (mean b4). The null hypothesis for the equality of impacts 

across gender is: (b1-b2) = (b3-b4), or b1=b2+b3-b4 which is a linear restriction on the model. Since we are using a 

covariate-adjusted regression model, an F-test is a more convenient way to proceed than a t-test.
Evaluation of Project GATE 68 December 2009

Several factors are likely to be responsible for the larger impact of Project GATE on UI 

recipients. For example, UI recipients may have fewer alternative opportunities in the regular 

labor market, making self-employment more attractive. Also, not having a wage and salary job 

provides the unemployed with more time to work on their business. Finally, receipt of UI 

benefits provides UI recipients with a regular income while attempting to start a business. The 

results presented above are consistent with previous research, which also found that unemployed 

individuals are much more likely to attempt self-employment than those already working in 

wage and salary jobs (Evans and Leighton 1989; Meager 1992). 

5.1.4 Impacts by Other Subgroups

In addition to the differences between impacts for UI recipients and non-UI recipients, subgroup 

analysis also revealed that Project GATE increased business ownership among men more than 

among women. Men experienced an impact of 7 percentage points on business ownership over 

the 60-month follow-up period (see Table V.1). An F-test was used to test the hypothesis that 

the magnitudes of the impact on men and on women were identical. The hypothesis was rejected 

at the 1 percent level, suggesting that the magnitude of the impact on men was different from that 

on women. 

Previous studies have shown mixed results on whether there are gender differences in the effect 

of self-employment assistance services. One study (Aronson 1991), showed that men are more 

likely to become self-employed following self-employment services. Another study (Benus et al. 

1995) showed that, in one demonstration state women were more likely than men to benefit from 

self-employment services, but in a second demonstration state there was no gender difference. 

A new study recently released by the Small Business Administration reported that women base 

their self-employment decisions on lifestyle and family factors, while men are motivated by 

Project GATE increased business ownership among men more than among women. 

[Table V.1]
Evaluation of Project GATE 69 December 2009

earnings potential (Gurley-Calvez et al., 2009).

Of the 16 subgroups examined (see Table V.1), significant differences in the impacts on overall 

business ownership were found for only 2 subgroups: males and UI recipients. Given that the 

evaluation team tested many subgroups, these differences could be appearing by chance. 

The authors suggest that the differences in 

motivating factors to become entrepreneurs could indicate the need for policies encouraging the 

self-employment of women in general, and targeting innovative, high-earning women in 

particular. 

Table V.1: Impacts on Business Ownership

Subgroup 

Program 

Group 

Mean

a

Control 

Group

Mean

Impact on All 

Eligible 

Applicants

Receiving Unemployment Insurance at Random Assignment

Yes 61% 55% 5.4 *

No 63 63 -0.3

Submitted a UI Claim in Quarter Prior to Random Assignment

Yes 61 61 0.6

No 61 59 1.9

Working at Random Assignment

Yes 57 58 -0.5

No 61 57 3.7

Self Employed at Random Assignment

Yes 89 90 -1.2

No 56 53 2.6

Ever Self Employed Prior to Random Assignment

Yes 72 69 2.9

No 50 48 1.8

Gender

Male 65 58 6.5 **

Female 60 63 -3.7

Age Greater Than or Equal to 40 Years

Yes 59 58 0.7

No 66 63 2.6

Education Greater Than 12th Grade

Yes 66 62 3.5

No 60 59 0.5
Evaluation of Project GATE 70 December 2009

Race is White

Yes 65 63 1.9

No 59 57 1.6

Past Credit Problems

Yes 61 59 2

No 63 62 1.2

Minor Living in the Household

Yes 61 59 2

No 60 58 2

Have More than 5 Years of Managerial Experience

Yes 64 63 1.6

No 60 59 1

Household Income

Less than $25,000 54 55 -1.2

Greater than or equal to $25,000 69 66 3.1

Lacks A Car, Telephone, Computer, or Bank Account

Yes 57 54 3.7

No 64 62 1.9

Receiving TANF, Food Stamps, SSI, or General Assistance

Yes 53 52 0.9

No 63 61 1.2

Score on Personal Assessment of Suitability for Self Employment

Less than 90

b

62 61 1.3

Greater Than or Equal to 90 62 60 1.9

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3. 

Notes: Reported means and impacts are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

a

Defined by characteristics reported on the GATE application form prior to random assignment.

b

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

The GATE application form asked whether the applicant would say whether 21 statements about their 

personality were “very true,” “somewhat true,” “neither true nor untrue,” “somewhat untrue,” or “very 

untrue.” A scale was developed from these scores that could range from 21 to 105, with a higher score 

indicating a personality that is usually viewed as more conducive to business development.
Evaluation of Project GATE 71 December 2009

5.2 Impacts on Business Openings and Closures

The life cycle of business start-ups can vary dramatically. Data from the first U.S. Panel Study 

of Entrepreneurial Dynamics reveals that, after about four and a half years, about one-third of 

individuals were operating a new business, one-third were still in the active start-up phase, and 

one-third had disengaged from the entrepreneurial process (Gartner et al. 2004). In this section 

we examine whether GATE had an impact on new business openings and closures. The vast 

majority (about 95 percent) of businesses owned by sample members were started from scratch. 

Less than 5 percent of program or control group members acquired their businesses through a 

purchase, inheritance, or other transfer of ownership.

Program group members, however, were significantly more likely than control group members to 

start a new business after random assignment. As indicated in Figure V.5, between random 

assignment and the Wave 1 survey, 20 percent of GATE program group members, compared to 

14 percent of control group members, reported owning a business that was established after their 

application to the GATE program -- a 6 percentage point difference that is significant at the 1 

percent level. Over time, the difference between the two groups declined but remained 

statistically significant through Wave 2. Between random assignment and Wave 2, 33 percent of 

the program group opened a business while 28 percent of the control group did the same (a 5 

percentage point difference). By the time of the Wave 3 survey, the difference was not 

statistically significant. 

GATE had a significant impact on the number of business start-ups in the early

quarters following random assignment. GATE had no impact on the number of 

business closures. [Figure V.5 and Figure V.6] 
Evaluation of Project GATE 72 December 2009

Figure V.5: Impacts on Business Openings

Source: Follow-up surveys, Wave 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

In contrast to GATE’s impact on business openings, GATE had no impact on business closings. 

As indicated in Figure V.6, between random assignment and Wave 1, the proportion of 

individuals closing their business was 2 percent for both program and control groups. 

Throughout the observation period, 13 percent of program group members and 14 percent of 

control group members had a business closure. 
Evaluation of Project GATE 73 December 2009

Figure V.6: Impacts on Business Closures

Source: Follow-up surveys, Wave 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

5.3 Number of Businesses Owned

As indicated in Table V.2, 37 percent of GATE participants, compared to 33 percent of control 

group members, reported having owned one business between random assignment and the Wave 

1 survey, a difference significant at the 10 percent level. However, between Wave 1 and Wave 2 

the difference between program and control group dissipated. There was also no difference for 

the period between Wave 2 and Wave 3. 

The average number of businesses owned between random assignment and the Wave 1 survey 

was slightly higher among program group members compared to control group members (0.5 vs. 

0.4, significant at the 1 percent level). This difference also disappeared for the period between 

Wave 1 and Wave 2 and for the period between Wave 2 and Wave 3. 
Evaluation of Project GATE 74 December 2009

Table V.2: Impacts on Number of Businesses Operated

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on 

All Eligible 

Applicants

Number of Businesses Operated Between 

Random Assignment and Wave 1

1 37% 33% 4% *

2 4 3 1

3 or more 0 0 0

Average 0.5 0.4 0.1 ***

Number of Businesses Operated Between 

Wave 1 and Wave 2

1 39 38 1

2 4 4 0

3 or more 1 1 0

Average 0.5 0.5 0

Number of Businesses Operated Between 

Wave 2 and Wave 3

1 38 38 0

2 5 4 0

3 or more 0 0 0

Average 0.5 0.5 0

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Wave 1, 2, and 3. 

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 75 December 2009

5.4 Business Size

Businesses owned by both the program and control group members were generally small. As 

indicated in Table V.3, there is little difference between the program and control group in the 

proportion of businesses that had employees.22

Only about one-quarter of the business owners in Wave 3 reported having any employees. 

Thus, the vast majority of businesses provided employment only for the business owner. At 

Wave 3, for example, only 24 percent of the businesses owned by the program group had any 

employees other than the owner. The percentage of control group businesses with employees 

was 28 percent (not statistically different). For both program and control groups, there appear to 

be small increases in employees between each of the survey waves, suggesting that the 

businesses experienced a modest employment growth over time. However, the vast majority of 

businesses were still small in size, with only a tiny fraction reporting more than five employees 

(not shown).

 

22 Although the differences in the sizes of the businesses may be informative, they should not be considered as 

impacts of Project GATE. The observed differences could be a result of an impact of Project GATE on the size of 

business owned, but could also be a result of Project GATE leading to different types of people starting a business.
Evaluation of Project GATE 76 December 2009

Table V.3: Employees of Current or Most Recent Businesses

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Difference

Has Any Employees

Wave 1 19% a 16% 3

Wave 2 23 b 22 2

Wave 3 24 c 28 -4

Has Full-Time Employees

Wave 1 10 a 11 0

Wave 2 11 b 11 0

Wave 3 10 c 13 -3

Has Part-Time Employees

Wave 1 15 a 13 3

Wave 2 18 b 17 1

Wave 3 19 c 22 -3

Number of Respondents 1,274 1,176 2,450

Source: Follow-up survey, Waves 1, 2, and 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics. As the means were 

computed over nonrandom samples of the program and control group, the differences should not be interpreted as 

impacts.

a

Means computed over 1,025 respondents who owned a business between random assignment and the Wave 1 

survey. 

b Means computed over 1,097 respondents who owned a business between the Wave 1 and 2 surveys. c

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Means computed over 955 respondents who owned a business between the Wave 2 and 3 surveys.

Consistent with the fact that most entrepreneurs worked alone, about 76 percent of all businesses 

in the Wave 3 survey were operated out of the respondents’ homes (see Figure V.7). Another 19 

percent were located in commercially available space. This is a slight increase over Wave 2,

when 79 percent were operated in the home and only 16 percent located in commercially 

available space. No program-control differences in business location were found.
Evaluation of Project GATE 77 December 2009

Figure V.7: Location of Current or Most Recent Business

Source: Follow-up surveys, Wave 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the 

program and control group members in baseline characteristics. Estimates were obtained using 

weights to adjust for differences between survey respondents and nonrespondents in baseline 

characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

As indicated in Table V.4, control group members reported significantly higher average monthly 

sales than program group members in Wave 1. The level of monthly sales did not differ between 

the two groups in subsequent waves, however. Reported monthly expenses did not differ 

between program and control group business owners in any wave. 

We believe that the reported monthly sales and expenses levels may not be accurately reported 

by all business owners (due to the general reluctance of business owners to reveal their sales and 

expense figures). As a result, we constructed a measure to indicate business profitability more 

objectively: the ratio of reported sales to reported expenses. As indicated in Table V.4, more 

than half of both program and control group members reported that their sales exceeded 

Among business owners, business profitability was similar for both program and 

control group members. [Table V.4] 
Evaluation of Project GATE 78 December 2009

expenses. Furthermore, business profitability appears to have increased in each wave for both 

groups. 

Table V.4: Sales, Expenses, and Salary Payments of Current or Most Recent Business

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Difference

Average Monthly Sales

Wave 1 $2,944 a $4,975 -$2,031 *

Wave 2 4,473 b 5,482 -1,009

Wave 3 4,970 c 6,441 -1,471

Average Monthly Expenses

Wave 1 1,875 a 2,553 -678

Wave 2 2,481 b 3,069 -588

Wave 3 3,595 c 4,329 -734

Sales Exceed Expenses

Wave 1 54% a 52% 3

Wave 2 55 b 56 -1

Wave 3 63 c 58 4

Source: Follow-up survey, Waves 1, 2, and 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics. Means computed using 

only sample members who owned a business between random assignment and Wave 1. As the means were 

computed over nonrandom samples of the program and control group, the differences should not be interpreted as 

impacts. 

a

Means computed over 1,060 respondents who owned a business between random assignment and the Wave 1 

survey.

b

Means computed over 1,154 respondents who owned a business between the Wave 1 and 2 surveys.

c

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Means computed over 1,212 respondents who owned a business between the Wave 2 and 3 surveys.
Evaluation of Project GATE 79 December 2009

5.5 Time to Start First Business

As indicated in Table V.5, among program group members who started a business, 69 percent

started their business within a year of random assignment whereas 64 percent of control group 

businesses started during the same time frame. On average, program group members started 

their business approximately 11.0 months after random assignment compared to 13.1 months for 

control group members.23

Table V.5: Time to Start of First Business after Random Assignment

 

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Differences

0-1 year 69% 64% 5

1-2 years 18 15 3

2-3 years 6 11 -6 ***

3-4 years 5 5 0

4+ years 3 4 -2

Mean (in Months) 11.0 13.1 -2.1 **

Source: Wave 1, 2, 3 follow-up survey.

Notes: Reported means and differences are regression-adjusted to control for differences 

between the program and control group members in baseline characteristics. 

a Means computed using only the 1,009 sample members who established a new business 

between random assignment and wave 3.

b The p-value for a chi-square test of distributional differences is 0.007.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

 

23 Although the differences in business start timing may be informative, the difference should not be considered as 

impacts of Project GATE. The observed differences could be a result of Project GATE leading to different types of 

people starting a business.

Program group members started their business earlier than control group members

[Table V.5 and Figure V.8]
Evaluation of Project GATE 80 December 2009

An alternative methodology for analyzing time to start of first business is examining the 

cumulative hazard distribution, where the hazard is defined as the start of the first business after 

random assignment. The cumulative hazard distribution indicates the probability that an 

individual started a first business in a given month during the observation period. The graphical 

representation of the cumulative hazard function is presented in Figure V.8. It demonstrates that 

at random assignment and in the very early weeks following random assignment there was little 

difference between the program and control group. Starting at about month 3, the probability a 

program group member started a business began to exceed that of a control group member. This 

gap widened until around month 25, after which it slowly began to narrow. It was not until 

around month 50 that the gap between program and control group members narrowed to a very 

small amount. In summary, the program group members were able to start their businesses 

earlier and, on average, it took longer for control group members to start their first business. 

Figure V.8: Time to Start First Business

Mean Program

11

Mean Control

13.1

0.00 0.25 0.50 0.75 1.00

0 2 0 4 0 6 0

M onths Until First Business Begins

Control Program

Source: Wave 1, 2, 3 follow-up survey.
Evaluation of Project GATE 81 December 2009

5.6 Business Longevity

As indicated in Table V.6, businesses started by program group members appear to have slightly 

greater longevity than businesses started by control group members. On average, business 

started by program group members remained in operation for 32.5 months while businesses 

started by control group members remained in operation 30 months. This observed difference 

may reflect the fact that program group members started their businesses sooner than control 

group members and the truncation of the observation period at approximately 5 years24

Table V.6: Longevity of Business

. 

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Differences

Businesses that operated between wave2 and wave3

0-1 year 17% 19% -2

1-2 years 15 21 -6 *

2-3 years 22 20 2

3-4 years 26 23 3

4+ years 20 18 2

Mean (in Months) 32.5 30 2.5 *

Source: Wave 1, 2, and 3 follow-up surveys.

Notes: Reported means and differences are regression-adjusted to control for differences 

between the program and control group members in baseline characteristics. 

a Means computed using only the 652 businesses which operated between wave 2 and 

wave 3. The p-value for a chi-square test of distributional differences is 0.16.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

 

24 While these differences are interesting, the differences should not be considered as impacts of Project GATE. The 

observed differences could be a result of Project GATE leading to different types of people starting a business.

The longevity of first business started after random assignment was greater for 

program group members than control group members. [Table V.6 and Figure V.9]
Evaluation of Project GATE 82 December 2009

Business longevity is also presented graphically in Figure V.9. The graph represents the entire 

probability distribution of business longevity. This graph reveals two results:

• The average business among program group members lasted 32.5 months, slightly 

higher than the average of 30 months for control group members. 

• Program group members had relatively more businesses lasting for approximately 27

to 60 months, compared to control group members. Conversely, control group 

members had relatively more businesses lasting 0 to 27 months than program group 

members.

Both of these results are consistent with Project GATE helping individuals start their businesses 

earlier. Because program group members tended to start their businesses earlier, by the cutoff 

point of data analysis at the Wave III survey, their businesses tended to have higher longevity, 

and up until Wave III were just as likely to remain in operation as were control group businesses.

Figure V.9: Business Longevity

Mean Control

30

Mean Program

32.5

0 .005 .01 .015 .02

Density

0 20 40 60 80

Longevity of Business

In Months

Control Program

Source: Wave 1, 2, 3 follow-up survey.
Evaluation of Project GATE 83 December 2009

5.7 Earnings from Businesses

Survey respondents who had owned businesses were asked about the wages and salaries they 

paid themselves from each of their own businesses. In spite of the relatively high selfemployment rates, very few respondents reported receiving wages or salaries through selfemployment. Over the entire follow-up period, the program group earned about $11,000 on 

average in wages and salary from self-employment, while the control group earned an average of 

about $10,000 in salary related to self-employment (see Table V.7 and Figure V.10). As 

indicated, the difference in earnings was not statistically significant in any of the 16 quarters. 

Over the 16 quarter observation period, the difference in earnings between the program and 

control groups was $962 (not statistically significant). 

Besides wages and salaries, self-employed individuals may also have non-salary sources of 

income through their businesses, such as bonuses, profit distribution, or owners’ draw from 

revenues. Both groups earned, on average, an additional $3,500-$3,700 in non-salary income.25

The total difference between the two groups was $166 dollars, which was not statistically 

significant. 

 

25 The low level of reported total compensation from businesses may be real—most businesses are in their infancy. 

However, income underreporting may also be playing a role. Underreporting by the self-employed is well 

documented. Kesselman (1989) estimates that while nearly all wage and salary earnings (98 to 99 percent) were 

reported to the Internal Revenue Service, those who were self-employed reported only 79 percent of their income. 

This may be because it is more difficult to accurately measure business earnings than it is to measure wage and 

salary earnings, or it may be driven by people intentionally understating income for tax reasons. Since more 

program group members than control group members owned businesses, possible underreporting of selfemployment income may disproportionately underestimate the income of the program group.

Project GATE did not have an impact on the earnings of business owners. [Table V.7 

and Figure VI.10]
Evaluation of Project GATE 84 December 2009

Table V.7: Impacts on Earnings

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Earnings from 

Businesses in Quarter 

After Random 

Assignment

Quarter 1 $345 $419 -$74

Quarter 2 471 533 -62

Quarter 3 555 524 31

Quarter 4 655 607 47

Quarter 5 662 619 43

Quarter 6 649 622 27

Quarter 7 655 654 1

Quarter 8 689 599 90

Quarter 9 706 611 95

Quarter 10 721 626 95

Quarter 11 751 657 94

Quarter 12 791 675 116

Quarter 13 815 679 136

Quarter 14 811 685 126

Quarter 15 808 696 111

Quarter 16 786 700 86

All quarters 1 to 16 10,870 9,906 962

Total Non-Salary 

Income from Businesses 3,700 3,533 166

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3. 

Notes: Reported means and impacts are regression-adjusted to control for 

differences between the program and control group members in baseline 

characteristics. Estimates were obtained using weights to adjust for differences 

between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 85 December 2009

Figure V.10: Impacts on Earnings

Source: Follow-up surveys, Wave 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level. 

A similar analysis (see Figure VI.11 in Chapter 6), suggests similar albeit somewhat larger 

results for GATE participants receiving UI at random assignment. For individuals receiving UI 

at random assignment, program participants earned an additional $3,088 through selfemployment earnings (not statistically significant), and $1,655 more in non-salary income 

(statistically significant at the 10 percent level). 

5.8 Differences in the Types of Businesses Developed

Project GATE may influence not only the prevalence and timing of business ownership but also 

the characteristics of businesses developed by participants. This section examines the ownership 

structure and location, business financing, and industries in which businesses were developed.
Evaluation of Project GATE 86 December 2009

5.8.1 Ownership Structure

The ownership structure of respondents’ businesses did not differ significantly between program 

and control groups at the Wave 3 survey. Over 60 percent of respondents reported that their 

current or most recent business was a sole proprietorship (see Table V.8). Approximately onequarter of the businesses were organized as corporations and the remainder were either 

partnerships, cooperatives, or other forms of business ownership structures. 

Table V.8: Ownership Structure of Most Recent Business at Wave 3

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Difference

Sole proprietorship 62% 61% 1

Corporation 28 26 2

Partnership 4 6 -2

Cooperative 1 1 0

Other 7 6 1

Number of Respondents 623 578 1,201

Source: Follow-up survey, Wave 3.

Notes: Reported means and differences are regression-adjusted to control for differences between

the program and control group members in baseline characteristics. Estimates were obtained using 

weights to adjust for differences between survey respondents and nonrespondents in baseline 

characteristics. Means computed using only sample members who owned a business between 

random assignment and Wave 1. As the means were computed over nonrandom samples of the 

program and control group, the differences should not be interpreted as impacts.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

5.8.2 Business Financing

Given that most businesses owned by the study sample were small start-ups, it is not surprising 

that respondents tended to fund their businesses largely with personal resources. About 85 

percent of both program and control group members used their own savings to support their 

businesses (see Table V.9). However, the control group was more likely, by 5 percentage points,

to take out a business loan (13 percent for the program group and 18 percent for the control

group). The control group also invested more in the business, on average, than did the program 

group ($39,681 versus $27,589). 
Evaluation of Project GATE 87 December 2009

Table V.9: Financing of Most Recent Business

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Conditional 

Difference

Types of Investments in the Business at Wave 2a,b

Participant’s savings 85% 86% -1

Personal loans 13 18 -5 **

Business loans 9 11 -2

Grants 3 1 2

Other capital 9 9 0

Average Investment in the Business at Wave 2a,c

Total $27,589 $39,681 -$12,092 *

Participant’s own money 17,473 20,091 -2,618

Personal loans 7,795 14,811 -7,016

Business loans 10,292 13,573 -3,282

Grants 32 9 22

Other capital 804 1,260 -456

Family Member Owned Part of the Business

Wave 1 10% d 4% 6 ***

Wave 2 10 a 7 3

Wave 3 10 8 2

Percent of Business Owned at Wave 1d

By participant 90 93 -2.8 **

By family member 5 2 2.6 ***

Percent of Business Owned at Wave 2a

By participant 92 9 0.21

By family member 4 3 1.21

Percent of Business Owned at Wave 3

By participant 92 92 0.92

By family member 4 4 0.2

Notes: Reported means and differences are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics. As the means were 

computed over nonrandom samples of the program and control group, the differences should not be interpreted as 

impacts.

a

Means computed over 1,025 respondents who owned a business between random assignment and Wave 1. 

b

Means computed over 1,097 respondents who owned a business between the Wave 1 and 2 surveys.

b

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Means computed over 955 respondents who owned a business between the Wave 2 and 3 surveys.
Evaluation of Project GATE 88 December 2009

5.9 Challenges to Starting a Business

Self-employment is not an easy pursuit. Every respondent who attempted to own a business 

during the follow-up period reported facing at least one challenge. The most common challenges 

faced by both program and control group members were insufficient capital or startup funds, 

finding clients, and becoming known or getting exposure (see Table V.10). The challenges 

reported in the Wave 3 survey were generally similar for the two groups. There were, however, 

some significant differences. More program group members than control group members 

reported challenges in finding clients. However, more control group members than program 

group members reported problems with the availability of supplies, products, or materials, as 

well as more problems with taxes. 

A number of these challenges changed in importance over time. For example, as seen in Figure 

V.11, the challenge of lack of capital or start-up funds declined over time for both program and 

control group members. The challenge of finding clients, as indicated in Figure V.12, differed 

significantly between the two groups in Wave 3. One-third of program members reported 

finding clients as a challenge compared to one-quarter of the control group. 
Evaluation of Project GATE 89 December 2009

Table V.10: Challenges to Starting a Business

Challenge

Program 

Group 

Mean

Control 

Group 

Mean

Conditional

Difference

Lack of capital or start-up funds 18% 18% 0

Finding clients 34 26 7 **

Becoming known or getting exposure 16 15 1

Insufficient cash flow 5 4 1

Amount of time and work involved 7 6 1

Regulations or licenses 3 4 0

Insurance 1 1 0

Problems with Supply or Product or Material 

Availability 1 3 -2 *

Uncertainty or changing economy 4 3 1

Personal or Family Barriers 2 1 0

Insufficient sales 0 0 0

Difficulties hiring qualified staff 1 1 0

Dealing with clients 1 0 1

Finding a location 1 2 -1

Local competition 0 1 0

Taxes 1 2 -1 *

Other 38 41 -2

Number of Respondents 574 524 1,098

Source: Follow-up surveys, Wave 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics. Means computed using 

only sample members who owned a business between Waves 2 and 3. As the means were computed over 

nonrandom samples of the program and control group, the differences should not be interpreted as impacts.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 90 December 2009

Figure V.11: Lack of Capital or Start-up Funds is a Challenge

Source: Follow-up surveys, Waves 1, 2, and 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between 

the program and control group members in baseline characteristics. Estimates were obtained using 

weights to adjust for differences between survey respondents and nonrespondents in baseline 

characteristics. Means computed using only sample members who owned a business between 

Waves 2 and 3. As the means were computed over nonrandom samples of the program and control 

group, the differences should not be interpreted as impacts.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 91 December 2009

Figure V.12: Finding Clients is a Challenge

Source: Follow-up surveys, Waves 1, 2, and 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between the 

program and control group members in baseline characteristics. Estimates were obtained using weights 

to adjust for differences between survey respondents and nonrespondents in baseline characteristics. 

Means computed using only sample members who owned a business between Waves 2 and 3. As the 

means were computed over nonrandom samples of the program and control group, the differences 

should not be interpreted as impacts.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Table V.11 presents the challenges reported by those who tried to start a business but were not 

ultimately successful. Not surprisingly, the types of challenges reported by these individuals 

differed sharply from those who owned a business during the follow-up period. Lack of capital 

or start-up funds was the single biggest challenge for those who unsuccessfully attempted to start 

a business. Becoming known was another barrier for significantly more respondents who were 

not able to start a business. By comparison, those who reported owning a business during the 

follow-up period were more likely to report challenges related to finding clients, becoming 

known or getting exposure, hiring staff, and insufficient cash flow.
Evaluation of Project GATE 92 December 2009

Table V.11: Challenges to Starting a Business, by Success at Starting a Business, Among 

Both Program and Control Groups

Challenge

Mean for Those 

Who Attempted 

But Did Not 

Own A Business

Mean for Those 

Who Owned A 

Business

Conditional 

Difference

Lack of capital or start-up funds 47% 19% -28 ***

Becoming known or getting exposure 7 30 21 ***

Finding clients 7 16 9 ***

Amount of time and work involved 6 6 0

Regulations or licenses 4 3 0

Finding a location 6 1 -5 ***

Insufficient cash flow 3 4 1

Insurance 1 1 0

Problems with supply or product or 

material availability 1 2 0

Taxes 2 2 0

Uncertainty or changing economy 3 4 1

Personal or family barriers 2 2 0

Insufficient sales 1 0 0

Local competition 0 1 1

Dealing with clients 1 1 0

Difficulties hiring qualified staff 2 1 -1

Other 43 40 -3

Number of Respondents 282 1,098 1,380

Source: Follow-up surveys, Wave 3. 

Notes: Reported means and differences are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for differences 

between survey respondents and nonrespondents in baseline characteristics. As the means were computed over 

nonrandom samples of the program and control group, the differences should not be interpreted as impacts. 

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 93 December 2009

5.10 Conclusion

This chapter examined the impact of Project GATE on business ownership and the dynamics of 

business start-up. Key findings are:

• Project GATE had a positive and statistically significant impact on the probability of 

owning a business in the first few quarters after random assignment.

• Impacts on business ownership peaked shortly after random assignment and then 

began to fade. By the Wave 3 survey, control group members were as likely as 

program group members to be self-employed.

• Program group members started their first business sooner and their businesses had 

greater longevity than control group businesses.

• The impact on business ownership was larger among individuals who were receiving 

UI at random assignment. Men were also significantly more likely to benefit from 

Project GATE than women.

• GATE had no impact on the earnings of the self-employed. 

The next chapter examines whether Project GATE increased total employment and earnings 

from self-employment and wage and salary employment combined. Outcomes of interest 

include total employment rate, number of months worked, number of hours worked, earnings, 

and job satisfaction. Characteristics of wage and salary jobs held by GATE sample members are 

also described.
Evaluation of Project GATE 94 December 2009

CHAPTER VI.

EMPLOYMENT AND EARNINGS

Project GATE was seen as a way to increase self-sufficiency by providing participants an 

alternative avenue for employment—working for oneself. This chapter explores whether, and by 

how much, Project GATE affected self-employment and self-employment earnings. In addition, 

the chapter explores whether Project GATE also affected wage and salary employment and 

earnings. Thus, this chapter addresses whether Project GATE affected total employment and

total earnings — whether working for oneself or for someone else. While the findings presented 

in Chapter V suggest that Project GATE had no impacts on self-employment earnings, Project 

GATE could still have affected total earnings if the program affected wage and salary jobs 

earnings.

If Project GATE simply shifts people to start their own business (i.e., to self-employment) rather 

than taking wage and salary jobs, or if GATE leads more people to start businesses concurrently 

with wage and salary jobs, total employment will remain unchanged. If, on the other hand, 

Project GATE helps people enter self-employment who would otherwise struggle to find wage 

and salary jobs, GATE could increase total employment. The latter is consistent with previous 

findings in separate studies by Evans and Leighton (1989) and Meager (1992). An evaluation of 

the UI Self-Employment Demonstration in Massachusetts also found some evidence that selfemployment assistance programs have a positive impact on total employment. Specifically, the 

Massachusetts program increased both the number of months in self-employment and wage and 

salary employment, and hence increased total employment (Benus et al. 1995). The same 

evaluation found that participants in Washington were more likely to be self-employed and less 

likely to be employed in wage and salary jobs, but that the former effect was larger, leading to 

increases in total employment.

This chapter begins by discussing the sources of data on employment and earnings. It then 

discusses the impacts of Project GATE on employment rates and hours worked. Next, it 

discusses the impacts on employment in the businesses that were started, followed by 

participants’ earnings. The chapter concludes with an examination of the effects of Project 

GATE on job satisfaction and the characteristics of jobs for those who were employed.
Evaluation of Project GATE 95 December 2009

6.1 Source of Data on Employment and Earnings

The follow-up survey collected data on employment and earnings. The survey collected data in 

three waves: about 6 months, 18 months, and 60 months after random assignment. Respondents 

were asked about all the businesses they owned (up to a maximum of five) as well as all the 

wage and salary jobs they held (up to a maximum of five), either since random assignment (in 

the Wave 1 survey) or since the previous wave of the survey (in the Wave 2 and Wave 3 

surveys). 

While the Wave 3 follow-up survey was scheduled to be, on average, 60 months after random 

assignment, some respondents did not have a full five years of earnings information following 

random assignment. Specifically, the Wave 3 surveys began in January 2009 and ended in 

August 2009 whereas random assignments were made from September 2003 through July 2005. 

As a result, for some respondents the Wave 3 survey was less than five years after random 

assignment. To avoid differential follow-up periods, we chose to report all earnings results for 

16 quarters (48 months) following random assignment. 

For each business the respondent owned, the start date and end date of the business was 

collected, along with key attributes of the business such as monthly sales, average weekly hours 

worked by the respondent at the business, the respondent’s income from the business, and loans 

or grants used to acquire the business. For each wage and salary job held, the respondents were 

asked about the start and end dates of the job, and other variables such as occupation, industry, 

earnings from the job, and fringe benefits. The start and end dates of each business owned and 

each job held were used to construct a history of employment over the entire follow-up period 

from random assignment through the date of the Wave 3 survey. 

In the earlier Project GATE impact evaluation (Benus et al. 2008); earnings data were also 

available from Unemployment Insurance (UI) administrative data. These administrative data 

provided total quarterly earnings from wage and salary jobs as reported by employers to state UI 

agencies. Although most wage and salary jobs are covered, self-employed workers are not 

included in these data. For the current impact evaluation, additional UI administrative data were 

not available. For this reason, all earnings outcomes in this report are based on survey data.
Evaluation of Project GATE 96 December 2009

6.2 Employment Rate

This section examines the impact of Project GATE on the probability of being employed. We 

examine separately: (a) the probability of being self-employed, (b) the probability of being 

employed in a wage and salary job, and (c) the probability of total employment—defined as 

either self-employment or wage and salary employment.

Since some individuals were employed at the time of random assignment, while others were 

unemployed and receiving UI benefits, we examine separately the employment rates of the full 

sample and the sample of UI recipients at random assignment.26 The employment rate of UI 

recipients is of particular interest, since GATE may play an important role in helping these 

individuals replace their lost income in the short run and provide a sustainable income in the long 

run. If GATE has a differential impact for UI recipients, self-employment programs like GATE 

may play an important role during periods of economic recession, when there are fewer wage 

and salary jobs available for the unemployed. 

6.2.1 Self-Employment Rate

During eight of the first nine quarters after random assignment Project GATE increased the 

likelihood of owning a business by 3 to 5 percentage points (see Figure VI.1). For example, in 

the second quarter after random assignment, 42 percent of the program group owned a business, 

compared to 37 percent of the control group (statistically significant at the 1 percent level). 

After the ninth quarter following random assignment, the differences in self-employment rates 

were negligible and not statistically significant. 

 

26 Some individuals may also have been unemployed but not receiving UI benefits. This group is included in the full 

sample.

Project GATE increased the likelihood of self-employment during the first few 

quarters after enrollment. After the ninth quarter, the impact was not statistically 

significant. [Figure VI.1]
Evaluation of Project GATE 97 December 2009

Figure VI.1: Self-Employment Rate by Quarter (Full Sample)

Source: Follow-up surveys, Wave 1, 2, and 3.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level. 
Evaluation of Project GATE 98 December 2009

Figure VI.2: Self-Employment Rate (UI Recipients at Random Assignment)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

A comparison of Figure VI.1 with Figure VI.2 indicates that the impact of Project GATE was 

more pronounced for individuals receiving UI benefits at the time of random assignment than for 

the sample as a whole. Specifically, for UI recipients at random assignment, the impact ranged 

between 6 and 9 percentage points during Q2 through Q6 after random assignment. Similar to 

the findings for the full sample, the impact declined substantially over time. At Q16, the 

difference between the program and the control group was negligible and not significant. 

Among UI recipients at random assignment, Project GATE substantially increased 

the likelihood of self-employment in the early quarters after random assignment. 

[Figure VI.2]
Evaluation of Project GATE 99 December 2009

6.2.2 Employment Rate at Wage and Salary Jobs

Figure VI.3: Wage and Salary Employment Rate (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

As indicated in Figure VI.3, control group members were generally more likely than program 

group members to be employed in wage and salary jobs throughout the follow-up period. In 

approximately half of the 16 quarters after random assignment, this difference was statistically 

significant. For example, during the fourth year after random assignment (Q13-Q16), about 61

percent of control group members had a wage and salary job, compared to 57 percent of program 

group members. 

Project GATE reduced the likelihood of wage and salary employment in about half 

the quarters following random assignment. In the remaining quarters, the impact 

was insignificant. [Figure VI.3]
Evaluation of Project GATE 100 December 2009

Figure VI.4: Employment in Wage and Salary Jobs (UI Recipient at Random Assignment)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

As shown in Figure VI.4, the impact of GATE on the likelihood of wage and salary employment 

for those who were UI recipients at random assignment was negative and substantial during the 

first 5 quarters after random assignment. Specifically, GATE reduced the likelihood of wage and 

salary employment by 6 to 10 percentage points. After the fifth quarter, however, the negative 

impact on wage and salary employment dissipated and was not statistically significant. This 

result is in contrast to the results for the full sample (Figure VI.3), where the impact was negative 

and statistically significant in year 4 following random assignment. 

Among participants who were unemployed at random assignment, Project GATE 

decreased the likelihood of being employed in a wage and salary job during most of 

the first year and a half after random assignment. [Figure VI.4]
Evaluation of Project GATE 101 December 2009

In summary, the results presented above indicate that, for the full sample, GATE had a modest 

and statistically significant positive impact on the likelihood of self-employment for 

approximately six quarters following random assignment. During much of this period, GATE 

had a statistically significant negative impact on the likelihood of wage and salary employment. 

For UI recipients at random assignment, however, the impacts of GATE were more pronounced. 

Both the positive impacts on the likelihood of self-employment and the negative impacts on the 

likelihood of wage and salary employment were more pronounced. 

6.2.3 Total Employment Rate

The findings thus far have demonstrated that GATE participants are more likely to be selfemployed but less likely to be working in wage and salary jobs during the early quarters after 

random assignment. These two impacts may offset each other. In this section, we combine selfemployment and wage and salary employment to explore whether Project GATE led to an 

increase or decrease in total employment for GATE participants. 
Evaluation of Project GATE 102 December 2009

Figure VI.5: Overall Employment Rate (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

As indicated in Figure VI.5, GATE had no impact on the likelihood of employment for 

individuals considered to be employed if they are either self-employed and/or employed in a 

wage and salary job. Following an initial increase in Q1-Q6, the employment rate declined for 

both the program group and the control group, settling at approximately 80 percent. The 

difference between the two groups was statistically significant only in Q7. 

Project GATE had no impact on the likelihood of total employment for the full 

sample. [Figure VI.5]
Evaluation of Project GATE 103 December 2009

Figure VI.6: Overall Employment Rate (UI Recipients at Random Assignment)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

An analysis of the overall employment rate for individuals receiving UI benefits at random 

assignment (Figure VI.6) shows that the program group and the control group exhibited similar 

overall employment patterns. Thus, the results on total employment for those receiving UI at 

random assignment are similar to the results for the full sample.

Project GATE had no impact on the likelihood of overall employment for UI 

recipients at random assignment. [Figure VI.6]
Evaluation of Project GATE 104 December 2009

6.3 Hours Worked

In previous sections, we examined the employment rates of program and control group members 

in each quarter. In this section, we examine the hours worked in each quarter.

6.3.1 Hours Worked at Self-Employment

Figure VI.7: Self-Employment Hours (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

During the early quarters following random assignment, Project GATE significantly 

increased the number of hours spent in self-employment. [Figure VI.7]
Evaluation of Project GATE 105 December 2009

From the second through sixth quarters after random assignment, Project GATE significantly 

increased the number of hours spent in self-employment. The impact ranged from 23 hours to 40 

hours per quarter (see Figure VI.7). For example, in Q6, the program group spent an average of 

219 hours in self-employment compared to 179 hours for the control group (a difference of 40 

hours in the quarter). Over the entire four-year study period, Project GATE increased the time 

spent in self-employment by 297 hours. This additional time was concentrated in the earlier 

quarters of the follow-up period.

6.3.2 Hours Worked at Wage and Salary Jobs

Figure VI.8: Wage and Salary Employment Hours (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

Project GATE reduced the number of hours spent in wage and salary employment. 

[Figure VI.8]
Evaluation of Project GATE 106 December 2009

In five of the first six quarters after random assignment and in the last four quarters of the 

follow-up period, Project GATE reduced the number of hours employed in wage and salary jobs. 

The impact averaged 23 hours per quarter, as seen in Figure VI.8. Over the entire 16-quarter 

follow-up period, GATE reduced the total number of hours employed in wage and salary jobs by 

275 hours. This mirrors the 291-hour increase in hours employed in self-employment. 

6.3.3 Total Hours Worked

Figure VI.9: Total Employment Hours (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

Inasmuch as Project GATE increased the hours in self-employment and decreased the hours in 

wage and salary employment by approximately equal amounts, the impact on total employment 

hours is insignificant throughout the follow-up period, as indicated in Figure VI.9. 

Project GATE had no impact on total employment hours. [Figure VI.9]
Evaluation of Project GATE 107 December 2009

In summary, the results of the analysis on hours of employment suggest that Project GATE had a 

positive impact on self-employment hours and a negative impact on wage and salary hours. 

These two opposite impacts on hours worked resulted in a conclusion of no impact on total hours 

employed. 

6.4 Employment in Businesses Started 

The above analysis concluded that GATE had no impact on total employment of Project GATE 

participants. Even though program group members were more likely to start a business and to 

work more hours in self-employment than control group members, this positive impact was 

negated by the reduction in wage and salary employment. 

When we examine employment, however, we should not overlook the potential additional 

employment generated by new businesses started as a result of Project GATE. Since GATE

program members started more businesses than control group members, they may have also 

generated more additional jobs for non-participants. In this section, we investigate the impact of 

GATE on employment generation. 

In Table VI.1 we present the number of businesses that were started after random assignment and 

were still operating at the time of each survey wave. Thus, if a business started after random 

assignment and was still operating at the Wave 1 survey, it was included in the Wave 1 count. If, 

on the other hand, a business started after random assignment but ceased operations prior to the 

Wave 1 survey the business was not included in the Wave 1 count. Similarly, if a business 

started after random assignment and was still operating at Waves 1, 2, and 3, it was included in 

all three wave counts. 

The results indicate that most businesses started generated only a single job for the business 

owner. In Wave 1, for example, program group members started 200 sole businesses with one 

Project GATE generated additional jobs for non-participants. [Tables VI.1 and VI.2]
Evaluation of Project GATE 108 December 2009

employee while control group members started 120. There were also a number of somewhat

larger businesses started prior to Wave 1. For example, control group members started 5 

businesses with 4-5 full-time equivalent (FTE) jobs, while program group members started 9 

such businesses.27

Table VI.1: Number of Businesses by FTE Size

 

FTE 

Employees in 

Business

Wave1 Wave2 Wave3

Program Control Program Control Program Control

1 200 120 225 191 206 164

2-3 38 21 41 38 52 45

4-5 9 5 13 8 11 14

6-10 3 3 8 8 9 7

11-20 1 2 2 3 3

21-30 3 1 1

31-40 1 1

41-50 1 1

51-60

61-70

Total number 

of businesses 252 154 289 249 282 233

IMPACT 98 40 49

As indicated in Table VI.1, program group members started a total of 252 businesses of all sizes 

that were still operating as of the Wave 1 survey, while control group members started a total of 

154 businesses. Thus, Project GATE impact was a total of 98 businesses as of Wave 1, 40 

businesses as of Wave 2, and 49 businesses as of Wave 3. It should be noted, however, that 

these differences in the number of businesses started at each wave are not significant. Moreover, 

when taking into consideration that the program group was larger than the control group at each 

wave, the program group’s advantage disappears. 

In Table VI.2 we convert the number of businesses started after random assignment and still 

operating at each wave into FTE jobs generated. At the time of the Wave 1 survey, program 

group members’ businesses generated a total of 416 FTEs; control group members’ businesses 

 

27 For this analysis, 2 part-time employees were considered equivalent to 1 FTE. 
Evaluation of Project GATE 109 December 2009

generated 310 FTEs – a difference of 106 FTEs. At Wave 2 and Wave 3, program group 

members’ businesses generated an additional 32 FTEs. As above, these differences are not 

statistically significant and the same caveats as above apply. 

Table VI.2: Number of FTEs Generated by Business Size

Employees Wave1 Wave2 Wave3

Program Control Program Control Program Control

1 200 120 225 191 206 164

2-3 88 48 94 88 124 105

4-5 39 21 56 35 45 58

6-10 22 22 59 56 67 53

11-20 17 23 31 39 36

21-30 76 24 22

31-40 31 33

41-50 50 42

51-60

61-70

Total number 

of jobs 416 310 465 433 509 477

IMPACT 106 32 32

6.5 Earnings 

In previous sections, we focused on the impact of Project GATE on business ownership and 

employment. We now turn to the question of whether Project GATE had an impact on earnings. 

We examine both earnings from self-employment and earnings from wage and salary jobs. 

6.5.1 Earnings from Self-Employment

Earnings from self-employment may take a number of forms. The entrepreneur may decide to 

receive a regular salary from the business. This method of payment corresponds most closely to 

how earnings are received from wage and salary jobs. Many business owners, however, do not 

receive a regular salary–receiving, instead, irregular, variable-sized, lump-sum payments based 

on how well the business is doing. These non-salary payments are referred to as profit 

distributions, owner’s draw, or bonuses. 
Evaluation of Project GATE 110 December 2009

Collecting accurate information on self-employment earnings is challenging for a number of 

reasons. First, as discussed above, payments to business owners are often irregular and, 

therefore, difficult to recall in a survey. Furthermore, since business owners can manipulate the 

timing of their earnings, they may choose to shift income from one year to another in order to 

minimize and/or adjust the timing of their tax liabilities. Finally, since some businesses are cash 

based, business owners have a greater opportunity than wage and salary workers to underreport 

their earnings. 

A number of studies have found that business owners frequently underreport their earnings. A 

GAO study, for example, reported that IRS examiners found that most sole proprietorships 

underreported their net business income.28 Other studies have used a variety of techniques and 

data to analyze underreporting of self-employment earnings. Herb Schutze of the University of 

Victoria analyzed self-employment underreporting in Canada.29 Schutze compared family 

expenditure on food to impute the underreporting of self-employed relative to wage and salary 

earners. He found that, in 1990, underreporting by the self-employed in Canada was between 12 

and 24 percent. Using a similar food consumption-based approach, Gibson, Kim and Chung 

analyzed underreporting of self-employment income in Korea. They found that 38 percent of the 

income of self-employed households in Korea is not reported.30 Still another study, by Feldman 

and Slemrod, compared charitable giving of self-employed households with that of other 

households. They found substantial noncompliance on tax returns and underreporting of selfemployment earnings.31 These and other studies indicate that self-employment earnings 

reported in the survey are likely to be significantly understated. 

 

28 GAO, TAX GAP: A Strategy for Reducing the Gap Should Include Options for Addressing Sole Proprietor

(GAO-07-1014) www.gao.gov/cgi-bin/getrpt?GAO-07-1014. 

29 Herb Schutze, “Profiles of Tax Non-Compliance Among the Self-Employed in Canada,” Canadian Public Policy, 

June 2002.

30 John Gibson, Bonggeun Kim, and Chul Chung, “Using Panel Data to Exactly Estimate Under-Reporting by the 

Self-Employed,” Working Paper in Economics 15/08, October 2008. 

31 Naomi E. Feldman and Joel Slemrod, “Estimating Tax Noncompliance with Evidence from Unaudited Tax 

Returns,” Discussion Paper No. 05-15, Monaster Center for Economic Research, July 2005
Evaluation of Project GATE 111 December 2009

In the GATE survey, we included a series of questions to determine regular self-employment 

earnings as well as other forms of income that a business owner might receive. For example, we 

asked about such non-salary income sources as bonuses, profit distributions, owner’s draw, and 

other non-regular income paid from the business. The results from an analysis of GATE impacts 

on self-employment earnings follow.

Figure VI.10: Regular Self-Employment Salary Earnings (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

Project GATE had no impact on regular self-employment earnings during any of the 

16 quarters following random assignment. [Figure VI.10]
Evaluation of Project GATE 112 December 2009

As indicated in Figure VI.10, there was little difference in self-employment earnings between the 

program group and the control group. Indeed, there was no statistically significant difference in 

any of the sixteen quarters following random assignment. 

An analysis of regular self-employment earnings for UI recipients in Figure VI.11 indicates that 

there was little difference between the earnings of the program and control group members in the 

early quarters. Later in the follow-up period, the gap in earnings increased. Over the entire 16-

quarter observation period, program group members earned approximately $3,000 more in 

regular self-employment earnings than control group members.

Figure VI.11: Regular Self-Employment Salary Earnings (UI Recipients at RA)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 
Evaluation of Project GATE 113 December 2009

6.5.2 Earnings from Wage and Salary Jobs

Figure VI.12: Wage and Salary Earnings (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

With the exception of a few early quarters, Project GATE had no impact on wage and salary 

earnings (including bonuses, commissions, and tips). This finding of no impact holds for the 

study sample as a whole (Figure VI.12) as well as for UI recipients at random assignment 

(Figure VI.13). 

Project GATE had little impact on earnings from wage and salary employment. 

[Figure VI.12]
Evaluation of Project GATE 114 December 2009

Figure VI.13: Wage and Salary Earnings (UI Recipients at RA)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

6.5.3 Total Earnings

Earnings from both self-employment and from wage and salary employment contribute to the 

individual worker’s financial well-being. Below, we combine these two income sources and 

analyze respondents’ total earnings. The results show that GATE did not have an impact on total 

earnings for the full sample. Furthermore, while total earnings appear higher for participants

after Quarter 6, the observed difference in earnings is not statistically significant.
Evaluation of Project GATE 115 December 2009

Figure VI.14: Total Earnings (Full Sample)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

With the exception of the first two quarters after random assignment, Project GATE 

had no impact on total earnings during the follow-up period. [Figure VI.14]
Evaluation of Project GATE 116 December 2009

Figure VI.15: Total Earnings (UI Recipients at Random Assignment)

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

As indicated in Figure VI.15, the impact of Project GATE on total earnings was negative in the 

first two quarters after random assignment. However, starting with Q3, there was no impact on 

total earnings. 

Among the unemployed, total earnings from self-employment and wage and salary employment 

over the entire 16-quarter study period were $1,981 higher for the program group than for the 

control group. However, this difference was not statistically significant.

Among UI recipients at random assignment, Project GATE had a brief initial 

negative effect on quarterly total earnings (Q1-Q2) but no impact in Q3-Q15. 

[Figure VI.15]
Evaluation of Project GATE 117 December 2009

6.6 Job Satisfaction

The fact that many people chose to own their own businesses rather than work as wage and 

salary earners suggests that self-employment may have non-pecuniary benefits that cannot be 

captured by measures of earnings alone (Hamilton, 2000). The results presented in Figure V.16

confirm that the self-employed from the Project GATE sample do indeed have a higher level of 

satisfaction than those who work in wage and salary jobs. 

Figure VI.16: Proportion of Very Satisfied with their Employment by Wave

Source: Follow-up surveys (Waves 1, 2 and 3)

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level 

The self-employed have a higher level of satisfaction than those who work in wage 

and salary jobs. [Figure VI.20]
Evaluation of Project GATE 118 December 2009

As indicated in the figure, in each of the three survey waves, those who were self-employed were 

substantially more satisfied than those who had a wage and salary job. The proportion of selfemployed who were “very satisfied” with their work was 56 percent to 57 percent, whereas the 

proportion of those working in a wage and salary job who were “very satisfied” ranged between 

42 percent and 47 percent. The proportion of “very satisfied” among those who were both selfemployed and working in a wage and salary job at the same time fell in between the proportions 

of the other two groups.

In Table VI.3, we compare satisfaction between program and control group members. As 

indicated in the table, program group members and control group members had essentially the 

same level of satisfaction with their employment. 

Table VI.3: Satisfaction With Employment at Wave 3

Outcome Program 

Group Mean

Control 

Group Mean

Conditional 

Difference

Self-Employed Only

Very satisfied 56% 56% 0

Somewhat satisfied 36 35 0

Somewhat dissatisfied 7 5 1

Very dissatisfied 2 3 -2

Wage and Salary Jobs Only

Very satisfied 48 47 0

Somewhat satisfied 41 40 1

Somewhat dissatisfied 9 8 1

Very dissatisfied 2 4 -2 *

Both Wage and Salary Job and Self-Employed

Very satisfied 51 51 0

Somewhat satisfied 39 38 1

Somewhat dissatisfied 8 7 1

Very dissatisfied 2 4 -2 **

Number of Respondents 1,274 1,176 2,450

Source: Follow-up survey, Wave 3.

Notes: Reported means and differences are regression-adjusted to control for differences between the program 

and control group members in baseline characteristics. Estimates were obtained using weights to adjust 

for differences between survey respondents and nonrespondents in baseline characteristics. Means 

computed using only sample members who worked at a wage and salary job between Waves 2 and 3. As 

the means were computed over nonrandom samples of the program and control group, the differences 

should not be interpreted as impacts.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 119 December 2009

6.7 Characteristics of Wage and Salary Jobs

This section reports on the characteristics of jobs among those who were employed in wage and 

salary jobs at some point during the follow-up period. It is important to bear in mind, however, 

that these differences are not experimental impacts—only individuals who were ever employed 

in the follow-up period are included. Hence, any differences between program and control 

groups may be either because Project GATE led to different jobs or because the characteristics of 

people with jobs differed between the two groups.

Project GATE extended the duration of unemployment by one week among those who were 

unemployed at random assignment. In Table VI.4, program group members who were 

unemployed at random assignment found their next wage and salary job 14 weeks after random 

assignment, on average. This was one week longer than control group members who were 

unemployed at random assignment. This finding is consistent with the expectation that GATE 

program group members may have tended to focus on starting a business instead of finding a job.

Among individuals who held a wage and salary job at some point between the Wave 2 and Wave 

3 surveys, program and control group members worked a similar number of hours per week and 

had similar hourly wages. The proportions receiving specific fringe benefits (e.g., paid sick 

leave) were also similar for program and control group members.

The job characteristics of program and control group members who had a wage and 

salary job between Wave 2 and Wave 3 were similar. [Table VI.4]
Evaluation of Project GATE 120 December 2009

Table VI.4: Characteristics of Current or Most Recent Wage and Salary Job

(Wave 3 Survey)

Outcome

Program 

Group 

Mean

Control 

Group

Mean

Conditional 

Difference

Weeks after Random Assignment Before First Job 

Began 14 13 1 *

Average Hours per Week Worked 38 37 0

Average Hourly Wage $18.10 $18.59 -$0.49

Fringe Benefits Received

Paid sick leave 58% 59% -1

Paid vacation 65 65 1

Paid holidays 68 67 2

Health insurance or membership in an HMO or 

PPO plan 66 65 2

Retirement, pension benefits, or a 401K plan 61 61 0

Life insurance 54 54 0

Number of Respondents 1,274 1,176 2,450

Source: Follow-up survey, Wave 3.

Notes: Reported means and differences are regression-adjusted to control for differences between the 

program and control group members in baseline characteristics. Estimates were obtained using 

weights to adjust for differences between survey respondents and nonrespondents in baseline 

characteristics. Means computed using only sample members who worked at a wage and salary 

job between Waves 2 and 3. As the means were computed over nonrandom samples of the 

program and control group, the differences should not be interpreted as impacts.

HMO = health maintenance organization; PPO = preferred provider organization.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 121 December 2009

6.8 Conclusions

In this chapter, impacts of Project GATE on employment and earnings were examined. Key

findings are:

• Project GATE increased the likelihood of self-employment during the first few 

quarters after enrollment. After Q9, the impact was not statistically significant. 

• Project GATE reduced the likelihood of wage and salary employment in about half 

the quarters following random assignment. In the remaining quarters, the impact 

was insignificant. 

• Combining self-employment and wage and salary jobs, Project GATE had no impact 

on the likelihood of total employment.

• Among individuals who were receiving UI benefits at random assignment, Project 

GATE substantially increased the likelihood of self-employment in the early quarters 

after random assignment. 

• Project GATE generated additional jobs for non-participants.

• Project GATE had no impact on regular self-employment earnings during any of the 

16 quarters following random assignment. 

• Project GATE had little impact on earnings from wage and salary employment. 

• With the exception of the first two quarters after random assignment, Project GATE 

had no impact on total earnings during the follow-up period. 
Evaluation of Project GATE 122 December 2009

CHAPTER VII.

IMPACT ON SELF-SUFFICIENCY

As described in Chapter VI, Project GATE shifted some work hours from wage and salary 

employment to self-employment. This shift resulted in no net impact on total earnings (defined 

as earnings from self-employment plus earnings from wage and salary employment) for the 

study group as a whole. 

This chapter explores whether Project GATE had an impact on participants’ reliance on UI and 

public assistance such as food stamps. It also explores the impacts of Project GATE on 

household income and the labor market participation of the entrepreneurs’ spouses. 

The chapter begins with a discussion of the impacts of Project GATE on the receipt of UI 

benefits. It then discusses the impact of Project GATE on the receipt of public assistance. The 

chapter ends with a discussion of the impact of Project GATE on total household income and the 

labor market participation of the participant’s spouse.

7.1 Receipt of Unemployment Compensation and Other Benefits

Chapter VI provides evidence that Project GATE decreased wage and salary employment in 

about half the quarters in the observation period. The effect of this reduction in wage and salary 

employment on UI benefit receipt is ambiguous. On the one hand, reduction in wage and salary 

employment is likely to lead to an increase in UI benefits receipt in the short run. In the long 

run, however, a reduction in wage and salary employment and earnings may reduce eligibility for 

UI benefits, which may offset the short run increase. 

The design of Project GATE in Minnesota adds a degree of complexity to the analysis of the 

impact of GATE on UI benefit receipt. Specifically, in Minnesota, the work search requirement 

was waived for Project GATE program group members – but not for GATE control group 

members. Thus, in Minnesota, GATE program group members were not required to search for a 

wage and salary job while they were working on starting a business (i.e., participating in GATE). 

This feature of the Minnesota design provided Minnesota GATE participants a benefit that was 

not available to other sample members, by enabling them to devote all their time to developing 
Evaluation of Project GATE 123 December 2009

their business while continuing to receive UI benefits. UI agencies in all the other demonstration 

states considered working more than 32 hours per week on a business as making the person 

“unavailable for work” and hence ineligible for benefits. Furthermore, in the states other than 

Minnesota, any earnings from self-employment could lead to a reduction in UI benefits. As a 

result of these differences between the GATE program in Minnesota and the GATE program in 

Pennsylvania and Maine, Minnesota program members had an incentive to remain on UI longer 

than control group members.32

7.2 Data Sources

In the previous GATE report (Benus 2008), the impact of Project GATE on UI receipt was 

estimated using two data sources: (1) administrative records collected from state UI agencies, 

and (2) two follow-up surveys. Both data sources include information on Trade Adjustment 

Assistance, Trade Readjustment Allowances, and Extended UI Benefits, as well as regular UI 

benefits. 

The main advantages of the administrative data are that they are accurate and available for all 

sample members, not just the survey respondents. On the other hand, they provide information 

only on claims and total payments over the claim period, so it is not always possible to identify 

whether payments were made before or after random assignment. Furthermore, due to time lags 

in data availability, UI administrative data are only available with some delay (approximately six 

months). 

The advantage of using survey data to measure UI benefits is that they are available for the entire 

follow-up period without delay. Their disadvantage is that they are subject to recall error. For 

the Wave 3 study, we rely only on survey data since, as noted elsewhere, state UI administrative 

data were not available at Wave 3. 

 

32In Pennsylvania, there was no work search requirement for either program or control group members and in Maine the work search 

requirement was waived for both program and control group members who participated in the Self-Employment Assistance (SEA) 

program.
Evaluation of Project GATE 124 December 2009

7.3 Receipt of UI Benefits

The results of the 2008 GATE study (based on the UI administrative data) indicated that Project 

GATE had at most a very modest impact on the probability of establishing a new UI claim. 

Furthermore, Project GATE increased the number of weeks paid by about three-quarters of a 

week and increased total payments by $335. Most of this effect came from claims established 

prior to random assignment. Hence, the impact was not from participants establishing new 

claims, but from their claiming more weeks of payments during the benefit year. 

As expected, the impact on the amount of UI benefits received was larger—$605—for the 

subgroup of participants who were already receiving UI at the time they applied to Project 

GATE. The impact on UI receipt was especially large for the UI recipients in the Minnesota 

sites, as expected, given that the UI work search requirements were waived for Project GATE 

participants in that state. 

In the follow-up surveys, three outcome variables on benefit receipt were collected at each wave: 

(1) whether household members had received benefits, (2) the number of weeks in which 

benefits were received, and (3) the total amount of benefits received. These outcomes were 

collected for the following periods: between random assignment and Wave 1, between Wave 1 

and Wave 2, and between Wave 2 and Wave 3.33

In the previous report, findings from the survey data corroborate the findings from the 

administrative data. Over the follow-up period, Project GATE had no impact on the likelihood 

of receiving UI, but increased the length of time on UI benefits by just over 1 week and 

increased the amount of reported UI benefits received by $343 per program group member. 

Thus, the survey data yielded similar results to the results found using administrative data, 

suggesting that they may be an adequate substitute for administrative data on benefits.

 

33 The survey questions did not ask specifically about the respondent’s UI benefits. Rather, the survey questions 

referred to the household receipt of Unemployment Compensation, Trade Readjustment Allowances or Trade 

Adjustment Assistance. Since UI benefit payments represent the overwhelming portion of these benefits, we refer to 

these payments as UI benefits. 
Evaluation of Project GATE 125 December 2009

7.3.1 Full Sample

The results presented in Table VII.1 indicate that Project GATE did not have a statistically 

significant impact on the likelihood of benefit receipt. Fifty-four percent of the program group 

received benefits at some time during the study period, compared to 51 percent of the control 

group. 

Similarly, Project GATE did not have a statistically significant impact on weeks of benefit 

receipt over the entire follow-up period. Specifically, during the 60-month follow-up period, on 

average, the control group received benefits for 14 weeks, compared to 16 weeks for program 

group (not statistically significant). In contrast, for the period between random assignment and 

Wave 2, Project GATE increased the number of weeks of benefits by approximately 1 week 

(statistically significant). 

Project GATE had no impact on the total amount of benefits received over the study period. For 

the entire study period, on average, the program group received $4,846 in benefits while the 

control group received $4,329, yielding a difference of $517 in benefit receipt (not statistically 

significant). However, between random assignment and Wave 1, on average, program group 

members received $289 more in benefits than control group members (statistically significant). 

Over the 60-month follow-up period, Project GATE had no impact on the likelihood 

of benefit receipt, number of weeks of benefits, or amount of benefits received. 

[Table VII.1]
Evaluation of Project GATE 126 December 2009

Table VII.1: Impacts on Receipt of UI Benefits

Outcome Program 

Group Mean

Control 

Group Mean

Impact on All 

Eligible 

Applicants

Received UI, TRA, or TAA benefits

Between random assignment and Wave 1 

survey

40% 40% 0

Between Wave 1 survey and Wave 2 survey 13 12 1

 Between Wave 2 survey and Wave 3 survey 19 18 1

Between random assignment and Wave 3 

survey

54 51 3

Weeks of UI received

Between random assignment and Wave 1 

survey

7 6 1 **

Between Wave 1 survey and Wave 2 survey 2 1 0 **

 Between Wave 2 survey and Wave 3 survey 8 7 1

Between random assignment and Wave 3 

survey

16 14 2

Amount of UI, TRA or TAA benefits 

received

Between random assignment and Wave 1 

survey $2,119 $1,831 $289 *

Between Wave 1 survey and Wave 2 survey 386 285 101

Between Wave 2 survey and Wave 3 survey 2,340 2,209 131

Between random assignment and Wave 3 

survey 4,846 4,329 517

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE 127 December 2009

In summary, the results of the analysis of the entire study period (random assignment to Wave 3 

– approximately 60 months) yield different conclusions than were found in the earlier report,

which analyzed the first 18-months after random assignment. In analyzing the shorter follow-up 

period we concluded that GATE increased the number of weeks of benefits and the amount of 

benefits. The results of the present analysis indicate that, for the entire 60-month period, GATE 

had no impact on the likelihood of benefit receipt, weeks of benefits, or amount of benefits. 
Evaluation of Project GATE 128 December 2009

7.3.2 UI Recipients

Table VII.2: Impacts on Receipt of UI Benefits (UI recipients)

Outcome Program 

Group Mean

Control 

Group Mean

Impact on All 

Eligible 

Applicants

Received UI, TRA, or TAA benefits

Between random assignment and Wave 1 

survey

72% 69% 3

Between Wave 1 survey and Wave 2 survey 14 14 1

 Between Wave 2 survey and Wave 3 survey 23 23 -1

 Between random assignment and Wave 3 

survey

81 76 5

Weeks of UI received

Between random assignment and Wave 1 

survey

12 11 1 **

Between Wave 1 survey and Wave 2 survey 2 1 1 *

 Between Wave 2 survey and Wave 3 survey 9 10 -1

 Between random assignment and Wave 3 

survey

23 21 1

Amount of UI, TRA or TAA benefits 

received

Between random assignment and Wave 1 

survey $3,837 $3,243 $594 **

Between Wave 1 survey and Wave 2 survey 404 345 59

Between Wave 2 survey and Wave 3 survey 3,052 2,902 150

Between random assignment and Wave 3 

survey 7,294 6,500 794

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Over the 60-month follow-up period, Project GATE had no impact for UI recipients 

at random assignment on the likelihood of benefit receipt, number of weeks of 

benefits, or amount of benefits received. [Table VII.2]
Evaluation of Project GATE 129 December 2009

A comparison of the results presented in Table VII.2 with the results presented in Table VII.1 

indicates that, on average, the UI recipient subgroup was more likely to receive UI benefits than 

the full sample. About 40 percent of the full sample received benefits and about 70 percent of 

the UI recipient subgroup received benefits. For the UI recipient as was found for the full 

sample, Project GATE did not have a statistically significant impact on the likelihood of benefit 

receipt. Eighty-one (81) percent of program group received benefits at some time during the 

study period, compared to 76% of the control group. 

Similarly, Project GATE did not have a statistically significant impact on weeks of benefit 

receipt over the entire follow-up period. Specifically, during the 60-month follow-up period, on 

average, the control group received benefits for 21 weeks, compared to 23 weeks for program 

group (not statistically significant). In contrast, for the period between random assignment and 

Wave 1, Project GATE increased the number of weeks of benefits by approximately 1 week 

(statistically significant). 

Project GATE had no impact on the total amount of benefits received over the study period. For 

the entire study period, on average, program group received $7,294 in benefits while the control 

group received $6,500 yielding a difference of $794 in benefit receipt (not statistically 

significant). However, between random assignment and Wave 1, on average, program group 

members received $594 more benefits than control group households (statistically significant). 

7.4 Household Income and Earnings of Spouses

Household income is another key measure of the participant’s well-being. While the previous 

chapter discussed the impacts of Project GATE on the respondent’s earnings from selfemployment and wage and salary jobs, this section describes the impact of Project GATE on 

total household income. Each survey asked respondents to report on their household income in 

the previous 12 months. Household income includes income from businesses, wage and salary 

employment, employment of other members of the household, as well as UI and public 

assistance. 
Evaluation of Project GATE 130 December 2009

Project GATE did not have an impact on household income during any of the 12-month periods 

prior to the Wave 1, Wave 2, or Wave 3 surveys. In each survey, respondents were asked about 

household income only during the previous 12 months in order to minimize recall error. 

Household income is frequently underreported, especially when the respondent is asked about 

aggregate annual income (Moore et al. 2005). However, there is no reason to believe that 

program group members might have underreported their household income to a different degree 

than control group members.

Table VII.3: Impacts on Household Income and Spousal Earnings

Outcome Program 

Group Mean

Control 

Group Mean

Impact on All 

Eligible 

Applicants

Household Income 

12 Months Before Wave 1 Follow-up $35,940 $37,726 -$1,786

Household Income 

12 Months Before Wave 2 Follow-up 39,415 38,141 1,274

Household Income 

12 Months Before Wave 3 Follow-up 56,786 56,020 767

Married at Wave 3 Follow-up 46% 45% 1

Spouse Works at Wave 3 Follow-up 37 37 0

Weekly Earnings of Spouse at Wave 3 Followup

$323 $348 -$25

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

Project GATE had no impact on household income or spousal earnings. 

[Table VII.3]
Evaluation of Project GATE 131 December 2009

Project GATE had no impact on whether the spouse of the respondent was employed as of the 

Wave 3 survey. Also, GATE had no net impact on the weekly earnings of that spouse as of the 

Wave 3 survey. This could be the result of two opposing impacts. A reduction in the 

participant’s earnings from wage and salary employment (due to work on starting a business) 

could have encouraged the spouse to work more. On the other hand, the spouse may have 

reduced his or her participation in wage and salary employment to help the GATE participant 

start his or her business.

7.5 Conclusion

This chapter examined the impact of Project GATE on self-sufficiency. Key findings are: 

• Over the 60-month follow-up period, Project GATE had no impact on the likelihood 

of UI benefit receipt, number of weeks of benefits, or amount of benefits. 

• For UI recipients, the impact on the receipt of UI benefits was only significant at 

Wave 1. Over the 60-month observation period, Project GATE had no impact on the 

likelihood of UI benefit receipt, number of weeks of benefits, or amount of benefits. 

• Project GATE had no impact on the receipt of public assistance benefits. 

• For the subgroup of UI recipients at random assignment, GATE increased Veterans’ 

benefits.

• Project GATE had no impact on household income or the earnings of the 

entrepreneur’s spouse.
Evaluation of Project GATE 132 December 2009

CHAPTER VIII.

BENEFITS AND COSTS

An important criterion for determining whether a program is worth implementing is not just 

whether it is effective in improving outcomes, but whether it is effective enough to justify its 

costs. By placing a dollar value on the benefits and costs of a program, a benefit-cost analysis 

addresses whether the diverse impacts of a program are large enough to warrant the funds spent 

on it. This chapter presents a benefit-cost analysis of Project GATE. 

The chapter begins by presenting the framework for the benefit-cost analysis. It then discusses 

the estimates of Project GATE’s benefits and its costs. The chapter ends with a discussion of the 

relative size of the benefits and costs of Project GATE for the full sample and separately for the 

subgroup who were UI recipients at random assignment.

8.1 Benefit-Cost Analysis

Benefit-cost analyses of social programs use an accounting framework that itemizes all the 

benefits and costs of the program and places a dollar value on as many of these benefits and costs 

as possible. All benefits and costs are measured relative to the counterfactual—the situation in 

which Project GATE did not exist but the other self-employment services in the communities did

(represented in this case by the experiences of the control group). Hence, the benefits and costs 

are measured using estimates of the impacts of Project GATE.

Policymakers generally view a program as cost-effective if all its benefits, summed over 

everyone in society, exceed all its costs. The magnitude of the benefits and costs to society 

indicate how the program affects net resources in the economy.

Policymakers may also consider the distributional implications for the program as well, for 

which they examine who gains and who loses from a program. The potential benefits of the 

program accrue mainly to participants, while the costs accrue to the government and taxpayers. 

Hence, we estimate benefits and costs from three perspectives: participants, nonparticipants, and 

society as a whole. Participants are the GATE program group members and their spouses. 

Nonparticipants include the government and taxpayers, as well as anyone else affected by the 
Evaluation of Project GATE 133 December 2009

program, such as other organizations offering self-employment services. The benefits and costs 

to society as a whole are equal to the sum of the benefits and costs to participants and 

nonparticipants.

Some program impacts lead to a benefit to one group of people and an equal cost to another 

group. These impacts, often referred to as “transfers,” redistribute resources between groups 

within society, but do not affect total benefits or costs. For example, an increase in taxes paid on 

increased earnings by participants would be a benefit to the government/taxpayers but a cost to 

the participants, and hence neither a benefit nor a cost to society as a whole. An increase in 

Unemployment Insurance (UI) receipt is a benefit to the participant and, as long as the 

administrative cost of providing the payments is ignored, an equal cost to the government.

The estimated benefits and costs of Project GATE are derived mainly from the estimated impacts 

presented in earlier chapters of this report. We include the benefit or cost even if it is based on 

an impact estimate that is not statistically different from zero, because that is still the best 

estimate, even if imprecise.

The benefits and costs are measured over the evaluation follow-up period—about 60 months 

after random assignment. This period is appropriate for an evaluation of entrepreneurship 

training programs, because many new businesses take several years to become successful. While 

the costs of Project GATE accrue mainly in the first year after random assignment, the benefits 

to the business owners and employees may develop only after a number of years. 

The next two sections of this chapter discuss the benefits and costs of the program. For 

presentation purposes, we focus on the resources used to provide self-employment services as the 

“cost” of the program and call any other impacts of the program, even if they are negative, a 

“benefit.” These definitions of benefits and costs do not affect the estimate of the net benefits 

(benefits minus costs) of the program.
Evaluation of Project GATE 134 December 2009

8.2 Potential Benefits of Project GATE

The many potential benefits of Project GATE fall into three main categories: (1) business 

creation; (2) wage and salary employment; and (3) receipt of UI and public assistance. 

Throughout this report, we examined these benefits separately for (a) the full sample and (b) the 

subgroup who were receiving UI recipients at random assignment. Below, after presenting the 

potential benefits for the full sample, we present a comparison of the results for the UI recipient 

subgroup. 

8.2.1 Business Creation

Successful businesses create many benefits for their owners and employees, and potentially for 

the communities in which they are located. The main benefit is the output produced by the 

business. Earnings from the business benefit the owner and also benefit employees who receive 

earnings from the newly created business. The government benefits from any taxes paid on 

earnings from the business. Even if the owner does not pay any business taxes, taxes are still 

paid on income earned from the business and paid in sales taxes when the income is spent. 

Businesses may also have positive spin-off effects in the community by, for example, providing 

employment, creating demand for other services, and improving the economic environment of 

the community. Finally, although difficult to value in dollars, to the extent that business owners 

may be happier working for themselves rather than for someone else, this increased happiness is 

appropriately considered a benefit.

Conversely, businesses that fail are costly to their owners and to society as a whole. Apart from 

the uncompensated time spent by the owners working on their businesses, closed businesses also 

often result in wasted expenditures. Many materials and equipment acquired for the business can 

be sold, but often with a large loss; other expenditures cannot be recovered at all. For example, 

much of the expenditure of renovating retail space to house a specific store is unlikely to be 

recovered. Loan defaults and bankruptcy are also costly to the business owner, the government, 

and others.

Over the follow-up period, the long-term benefits of Project GATE from business creation derive 

from a number of sources.
Evaluation of Project GATE 135 December 2009

• Business Ownership. Program group members were more likely than control group 

members to start a business after random assignment. The impact was statistically 

significant in the early quarters after random assignment. By the end of the 60-

month observation period, however, the percentage of program participants who 

were self-employed was similar to the percentage of control group members who 

were self-employed (Section 5.1). Over the entire 60-month period, program group 

members started 187 more businesses than control group members. 

• Business Earnings. Data reported on the survey suggest that on average, program 

group members earned more than control group members from businesses over the 

60-month follow-up period, although these results were not statistically significant 

(Section 5.7). The differences in earnings were $962 in regular salary income 

received from the business and $166 in non-salary income such as tips, bonuses, or 

commissions, for a total of $1,128.

• Size and Profitability of Businesses. Businesses begun by program group members 

were similar to those begun by control group members. While businesses started by 

program group members were similar in size and profitability (Section 5.4), over the 

60-month follow up period, businesses started by program group members employed 

170 more full time equivalent (FTE) employees than those started by control group 

members (Section 6.4).

• Satisfaction with Employment Situation. GATE participants were less likely to be 

“very dissatisfied” with their employment situation than members of the control 

group (Section 6.6).

8.2.2 Wage and Salary Employment

A potential cost (negative benefit) of Project GATE is the earnings forgone while GATE 

participants attended classes and counseling sessions and worked on starting their own business. 

Findings from the survey data suggest that Project GATE decreased earnings from wage and 

salary employment in the first few quarters after random assignment (Section 6.5.2). When 

income from wage and salary jobs over all 16 quarters of the study period is aggregated, program 
Evaluation of Project GATE 136 December 2009

group members earned on average $1,532 less than control group members, although this

difference was not statistically significant (Section 6.5.2). For the UI recipient subgroup, 

program members earned $1,107 less than control group members (not statistically significant). 

The cost of the reduced wage and salary employment is measured from the decrease in earnings 

at wage and salary jobs. We estimate the value of the fringe benefits on these earnings as 30 

percent of earnings—the national average (U.S. Department of Labor 2006). We assume the 

sample members paid 17 percent of their earnings in taxes. This tax rate is derived from 

combining the effective federal income tax rates reported by the Congressional Budget Office 

(2004) with state income, consumption, and property taxes reported by the Institute on Taxation 

and Economic Policy (2003).

8.2.3 Receipt of UI and Public Assistance

UI and public assistance payments are transfers from the government to the recipients—and 

hence are a cost to the government and an equal benefit to the recipient. The costs of 

administering the UI and public assistance programs, however, represent a use of resources and 

hence are a cost to the government and to society as a whole.

For our estimates of benefit and costs, we use the impact estimates derived from the surveys, 

since UI administrative data were not yet available. Impacts on public assistance receipt were 

also obtained from the surveys. The administrative costs of the assistances programs are about 7 

percent for UI, 16 percent for Food Stamps, 19 percent for cash assistance, 1 percent for Social 

Security benefits, and 10 percent for Veterans’ benefits (U.S. House of Representatives 

Committee on Ways and Means 2004). These figures are percentages of total benefits.

As shown in Table VII.1, GATE program group members received, on average, a total of $517 

more than control group members in UI benefits during the 16-quarter study period (Section 

7.1.2); $64 less in Food Stamps; $124 less in cash welfare (TANF); $175 more in Social Security 

benefits; and $146 more in Veterans’ benefits. None of these differences was statistically 

significant. The comparable benefits received by the subgroup of UI recipient are also shown in 

Table VIII.1. 
Evaluation of Project GATE 137 December 2009

Given the impact of Project GATE on each of these benefits, and the percentage of benefits spent 

on administrative costs, an administrative cost to the government associated with each benefit 

can be calculated. The total cost to the government is the amount of the benefit plus the amount 

of the administrative costs. These costs are shown for both the Full Sample and for UI 

Recipients at Random Assignment. 

Table VIII.1: The Costs of Project GATE in Changes in UI and Public Assistance Receipt

UI or Public Assistance Costs per Program Group 

Member

Full Sample UI Recipients

UI

 Payments $517 $794

 Administrative Costs 36 56

Food Stamps

 Payments 31 -29

 Administrative Costs 5 -5

Cash Welfare

 Payments -124 162

 Administrative Costs -24 31

Social Security Benefits

 Payments 175 -441

 Administrative Costs 2 -4

Veterans' Benefits

 Payments 146 414

 Administrative Costs 15 41

Total 779 1,019

Source: Tables VII.1 and VII.3.
Evaluation of Project GATE 138 December 2009

The negative of these costs can be considered to be the benefit of the GATE impact to the 

government. The sum of the benefit to the government and the benefit to the GATE participant 

is the benefit to society of Project GATE.

8.2.4 Comparison of Benefits: Full Sample and UI Recipients

Above, we examined (1) business creation; (2) wage and salary employment; and (3) receipt of 

UI and public assistance for the full sample. Inasmuch as many of the impacts reported in earlier 

chapters were larger and more often statistically significant for UI recipients than for the full 

sample, we present in Table VIII.2 a comparison of the benefits and costs for the full sample and 

for the UI recipient subgroup from the participants’ perspective. 

As indicated in the table, one of the major differences between these two groups is the earnings 

from the business during the observation period. The earnings impact for the UI recipient group 

was $4,743 as compared with $1,128 for the full sample (a difference of $3,615). 
Evaluation of Project GATE 139 December 2009

Table VIII.2: Comparison Benefit-Cost Analysis Participants' Perspective

Participants' Perspective

Benefits/Costs Full Sample UI Recipients Difference

Business Ownership

Earnings during the follow-up period $1,128 $4,743 $3,615

Earnings after the follow up period ? ? ?

Increased satisfaction ? ? ?

Total 1,128 4,743 3,615

Wage and Salary Employment

Earnings during the follow-up period -1,532 -1,107 425

Fringe Benefits -460 -332 128

Taxes 260 188 -72

Earnings after the follow-up period ? ? ?

Total -1,732 -1,251 481

Receipt of UI and Public Assistance

UI 517 794 277

Food Stamps -64 -29 35

Cash welfare -1,019 162 1,181

Social Security benefits -2,620 -4,643 -2,023

Veterans' Benefits 146 414 268

After the follow-up period ? ? ?

Total -3,040 -3,302 -262

Program Costs

Amount spent by DOL 0 0 0

Amount spent by participants 131 131 0

Amount spent by others 0 0 0

Total 131 131 0
Evaluation of Project GATE 140 December 2009

8.3 Costs of Project GATE

The costs of Project GATE are different when viewed from different perspectives. From DOL’s 

perspective, the cost of Project GATE is the amount of funds used to implement the program. 

This is the cost relevant to those considering replicating the program. However, the cost to 

society is the cost of the additional self-employment services obtained by the program group. 

The cost of the additional self-employment services takes into account that the control group also 

receives self-employment services that are costly to society. Hence, from society’s perspective 

the relevant cost of Project GATE is the cost of the services received by the program group 

minus the cost of the services received by the control group. After discussing the sources of cost 

data, we discuss each of these cost estimates in turn.

8.3.1 Sources of Cost Data

We collected cost data from two sources: invoices and service provider reports.

Invoice Data. The first source of data on GATE costs is the record of payments made by 

IMPAQ International to GATE service providers, One-Stop Career Centers, and marketing 

agencies in each site. The payments to service providers and One-Stop Career Centers were 

based on contracts agreed to before the start of the demonstration. In all sites but Maine, the 

payments were based on the number of participants served, irrespective of the number of hours 

of services received. In Maine, payments for counseling were based on the number of 

participants served but payments for classes were based on the number of new classes, not 

enrollment. Payments to marketing agencies were a function of the marketing these agencies 

were required to conduct, and were decided on during the demonstration.

A major advantage of the invoice data is that they are accurate. They also represent the market 

price of the services—the amount required for the providers to agree to provide services. 

However, we suspect that if Project GATE had not been part of a demonstration, and there was 

flexibility in the sites in which it could be implemented, the providers might have had less 

market power and might have agreed to receive less for the services provided. Moreover, the 

payments made were based on expected costs at the time the contract was signed rather than 

actual costs. Actual costs may differ from expected costs if, for example, GATE participants did 
Evaluation of Project GATE 141 December 2009

not spend as much time as expected in the program. Another drawback of the invoice data is that 

we are not able to estimate the costs of the separate components of Project GATE—assessments, 

technical assistance, and classroom training.

Data Collected from Service Providers. Data on the components of costs were also collected 

from service providers in each site.34

• The number of hours of services received by each program participant, which were 

entered by service providers into the GATE Participant Tracking System (PTS).

 These data included:

• Data on wages, salaries, and fringe benefits of business counselors, instructors, and 

other staff involved in Project GATE, along with overhead rates and administrative 

costs.

• The number of hours, on average, that counselors worked preparing for, or following 

up on, assessments and counseling sessions; and the average number of hours 

classroom instructors spent preparing for the class or conducting other tasks outside 

the classroom related to the course.

• Any costs for manuals or other supplies needed for a class.

• Average class size.

The cost of an assessment and counseling session was estimated from the number of hours staff 

spent on each participant and the cost per hour of the business counselor (inflated to account for 

fringe benefits, overhead costs, and administrative costs). The cost of training was calculated by 

the total cost of the instructors’ time (inflated to account for fringe benefits, overhead costs, and 

administrative costs) and any needed supplies. The cost of the training was divided equally 

among class attendees.

 

34Maine was unable to provide cost data in an easily usable form. To estimate costs in Maine, we used average estimates 

of costs by CBO and SBDC in the other sites.
Evaluation of Project GATE 142 December 2009

The main advantages of the service provider cost data are that they allow an understanding of the 

components of costs and also represent the actual use of resources. However, because they are 

based on provider reports, we suspect they are much less accurate than the invoice data.

The cost of an assessment and counseling session was estimated from the number of hours staff 

spent on each participant and the cost per hour of the business counselor (inflated to account for 

fringe benefits, overhead costs, and administrative costs). The cost of training was calculated by 

the total cost of the instructors’ time (inflated to account for fringe benefits, overhead costs, and 

administrative costs) and any needed supplies. The cost of the training was divided equally 

among class attendees.

The main advantages of the service provider cost data are that they allow an understanding of the 

components of costs and also represent the actual use of resources. However, because they are 

based on provider reports, we suspect they are much less accurate than the invoice data.

8.3.2 Cost of Project GATE to DOL

IMPAQ International spent just over $3 million on Project GATE, which represents just over 

$1,400 per program group member. Some of these costs, however, included activities that were 

only needed because the program was part of an evaluation. In particular, in order to fill a 

control group, twice as many applicants were recruited and attended orientations as were needed 

to fill program slots. Hence, in our estimates of the cost of Project GATE, we included only half 

the marketing, orientation, and other One-Stop Career Center costs. With this adjustment, the 

estimated cost of Project GATE per program group member based on the invoice data comes to

$1,321 (Table VIII.3).

The estimated cost per program group member based on invoice data varied from $976 in 

Minneapolis/St. Paul to $2,342 in Maine (Table VIII.3). Minneapolis /St. Paul had relatively 

low costs for several reasons. It was relatively successful at recruiting and hence required fewer 

resources for marketing. It also included several nonprofit community-based organizations 

(CBOs) that provided services at low cost by using either relatively low-paid staff or volunteers. 

In contrast, in Maine and Pittsburgh, staff at Small Business Development Centers (SBDCs) 

provided all the technical assistance. Reflecting the higher average education and experience of 
Evaluation of Project GATE 143 December 2009

staff at SBDCs, SBDC staff was paid more than staff at CBOs. The average GATE counselor at 

an SBDC was paid about $31 per hour; in contrast, the average GATE counselor at a CBO was 

paid only $19 per hour. The invoiced costs were particularly high in Maine because Maine 

enrollment was lower than expected and payments for training were based on classes begun 

rather than on enrollment.

Table VIII.3: Project GATE Costs by Site Based on Invoice Data

Site Marketing 

Orientation 

and Other 

One-Stop 

Costs a

Assessment, 

Technical

Assistance, 

and Training a Total

Total Cost 

per Program 

Group 

Member

Philadelphia $25,678 $34,839 $727,726 $788,242 $1,309

Pittsburgh 19,758 44,114 269,575 333,447 1,158

Minneapolis/St. Paul 9,599 51,298 754,220 815,117 976

Northeast Minnesota 6,606 6,340 127,185 140,131 1,445

Maine 17,152 32,843 643,951 693,946 2,342

Total $78,793 $169,434 $2, 522,657 $2, 770,883 $7,230

Source: IMPAQ International. a In order not to include the costs of recruiting and providing the orientation to the control group, only half of the 

marketing and orientation costs are included.

As expected, the estimated cost based on service provider reports was lower than the cost 

estimated from invoice data—only $859 per program group member (Table VIII.4). It was 

lower in all sites except Northeast Minnesota. The difference between the cost estimate based on 

invoice and provider data was largest in Maine. 

The estimated proportion of costs accounted for by each component of Project GATE is shown 

in Figure VIII.1. The share of costs accounted for by marketing and One-Stop Career Centers 

was collected using the invoice data. The share of costs for assessments, technical assistance, 

and classroom training was estimated using data from the service providers.

As indicated in Figure VIII.1, just over half of all Project GATE costs were for classroom 

training, reflecting the greater number of hours spent in classroom training than in assessments 

or business counseling. Service providers reported in the PTS that participants who received an 

assessment spent an average of 1.2 hours in assessment, 1.2 hours receiving technical assistance, 

and 10.5 hours receiving classroom instruction (Bellotti 2006). As discussed below, the cost per 
Evaluation of Project GATE 144 December 2009

person-hour for training is actually much lower than the cost per person-hour for assessments or 

counseling, because the cost of the instructor is divided among all class attendees and the median 

class size was 12.

Table VIII.4: Project GATE Costs by Site Based on Data from Service Providers

Site

Total Cost 

per Program 

Group 

Member

Philadelphia $772

Pittsburgh 1,211

Minneapolis/St. Paul 663

Northeast Minnesota 1,836

Maine 931 a

Average 859

Source: GATE service providers, GATE Participant Tracking System 

extract dated December 31, 2005. a Maine did not provide cost data. We estimated the cost of staff and 

other staff by taking the average of the other sites.

Figure VIII.1: Components of GATE Costs
Evaluation of Project GATE 145 December 2009

8.3.3 Costs of Project GATE to Society

The resource cost of Project GATE to society is the cost of the additional self-employment 

services used, rather than the cost of all Project GATE services received. While the receipt of 

GATE services is a cost, the reduced use of services under other programs by GATE participants 

is an offsetting benefit.

We estimated that Project GATE participants received a total of 13.3 more hours of selfemployment services than control group members (Table VIII.6). Of these, 8.4 hours were spent 

in classroom instruction, 1.5 hours one-on-one with a business counselor, and the rest on a 

variety of other services.

As data on the cost of self-employment services are not readily available, we used data on the 

cost of GATE services to estimate the cost of self-employment services irrespective of whether 

they were provided under Project GATE. This is a reasonable assumption, as GATE involved a 

variety of providers including both SBDCs and CBOs.

The cost per participant-hour was calculated for two types of services: one-on-one meetings 

with a business counselor (which includes assessments) and classroom instruction. The 

calculation involved the following steps. First, we used data provided by the service providers to 

calculate the proportion of all costs that could be accounted for by one-on-one counseling and 

classroom instruction (Table VIII.5, column 1). Second, we took the average of the total cost 

from the invoices and the total cost from the data provided by the service provider (column 2). 

This calculation allocated the marketing and One-Stop Career Center costs to the two 

components in the same proportion as the other costs. Third, we estimated the cost per personhour for counseling and classroom training (column 4), by dividing the total cost of each 

component (column 2) by the number of person-hours spent on the service calculated from the 

PTS (column 3).

The cost of spending an hour with a business counselor is estimated to be $182, while the cost of 

spending an hour in a class is only $61 (Table VIII.5). On average, we estimated that one 

person-hour of self-employment services costs about $84. 
Evaluation of Project GATE 146 December 2009

Based on these estimates of costs, the cost of the additional 13 hours of self-employment services 

received by Project GATE participants is $993 per program group member (Table VIII.6). Since 

DOL spent $1,321 per program group member on services and they received an additional $993 

worth of services, in the absence of Project GATE some other funding source would have had to 

cover $328 of the cost of the services. Since survey data show that participants paid $131 less 

for services than they would have done in the absence of Project GATE, this suggests that other 

funders of self-employment services (including the SBA, other government grants, and 

foundations) paid about $197 per program group member more than they would have done in the 

absence of Project GATE.

Table VIII.5: Estimates of Cost per Person-Hour of Self-Employment Services

1.

Percent of Costs 

on Component 

(Provider Data)

2.

Estimated 

Total Cost 

(Average from 

Invoice and 

Provider Data)

3.

Person-Hours 

Spent on 

Component 

(PTS)

4.

Estimated Cost 

per PersonHour

One-on-one 

with counselor 40.8% $931,725 5,111 $182

Classroom 

instruction 59.3 1,354,142 22,022 61

Total or 

Average 100.0 2,285,867 27,133 84

Source: Project GATE Participant Tracking System extract dated December 31, 2005; invoices paid by IMPAQ 

International; cost data provided by GATE service providers.

Table VIII.6: Costs of Additional Services Received by GATE Participants

Type of Self-Employment 

Service

Additional 

Hours

Cost per 

Person-Hour

Cost of Additional 

Services Received 

by GATE 

Participants

Classroom instruction 8.4 $61 $512

One-on-one counseling 1.5 182 273

Other 3.4 61 207

Total 13.3 n.a. 992

Source: Tables IV.4 and VIII.4.

n.a. = Not applicable
Evaluation of Project GATE 147 December 2009

8.4 Summary of Benefits and Costs of Project GATE

Policymakers are interested in the bottom line—the net benefits of Project GATE. This section 

presents our estimates of Project GATE’s net benefits and discusses the robustness of our 

findings to alternative assumptions.

Our estimates of the benefits and costs of Project GATE for the full sample are summarized in 

Table VIII.7; the net benefits for the UI recipient subgroup are summarized in Table VIII.8. A 

positive number indicates a benefit; a negative number indicates a cost. The benefits and costs 

estimated are those that accrued during the 60-month follow-up period. Benefits and costs of 

business ownership, wage and salary earnings, and receipt of UI and public assistance may 

extend after the observation period. Rather than attempting to estimate these benefits and costs, 

we simply list them in the tables along with the unmeasured benefit of additional satisfaction 

from self-employment. The net benefits from each perspective shown in the bottom row of the 

table are the sum of all the benefits and costs. The estimates of the benefits and costs are all 

presented as a benefit or cost per program group member.
Evaluation of Project GATE 148 December 2009

Table VIII.7: Benefit-Cost Analysis (Full Sample)

Perspective

Benefits/Costs Participants Non-Participants Society

Business Ownership

Earnings during the follow-up period $1,128 ? $1,128

Earnings after the follow up period ? ? $0

Increased satisfaction ? ? $0

Total 1,128 0 1,128

Wage and Salary Employment

Earnings during the follow-up period -1,532 0 -1,532

Fringe Benefits -460 0 -460

Taxes 260 -260 0

Earnings after the follow-up period ? ? 0

Total -1,732 -260 -1,992

Receipt of UI and Public Assistance

UI 517 -553 -36

Food Stamps 31 -36 -5

Cash welfare -124 148 24

Social Security benefits 175 -177 -2

Veterans' Benefits 146 -161 -15

After the follow-up period ? ? ?

Total 745 -779 -34

Program Costs

Amount spent by DOL 0 -1,321 -1,321

Amount spent by participants 131 0 131

Amount spent by others 0 197 197

Total 131 -1,124 -993

Measured Net Benefit 272 -2,163 -1,891

Source: Tables VIII.1, VIII.2.

? = unknown.
Evaluation of Project GATE 149 December 2009

Table VIII.8: Benefit-Cost Analysis (UI Recipients)

Perspective

Benefits/Costs Participants Non-Participants Society

Business Ownership

Earnings during the follow-up period $4,743 ? $4,743

Earnings after the follow up period ? ? 0

Increased satisfaction ? ? 0

Total 4,743 0 4,743

Wage and Salary Employment

Earnings during the follow-up period -1,107 $0 -1,107

Fringe Benefits -332 0 -332

Taxes 188 -188 0

Earnings after the follow-up period ? ? 0

Total -1,251 -188 -1,439

Receipt of UI and Public Assistance

UI 794 -850 -56

Food Stamps -29 34 5

Cash welfare 162 -193 -31

Social Security benefits -441 445 4

Veterans' Benefits 414 -455 -41

After the follow-up period ? ? ?

Total 900 -1,019 -119

Program Costs

Amount spent by DOL 0 -1,321 -1,321

Amount spent by participants 131 0 131

Amount spent by others 0 197 197

Total 131 -1,124 -993

Measured Net Benefit 4,523 -2,331 2,192

Source: Tables VIII.1, VIII.2.

? = unknown.
Evaluation of Project GATE 150 December 2009

Tables VIII.7 and VIII.8 yield mixed results for the cost-benefit analysis. The results in Table 

VIII.7 indicate that, for the full sample, Project GATE is cost-effective from the participant’s 

point of view, but not from the perspective of non-participants or society. Table VIII.8 indicates 

that for the UI recipient subgroup, Project GATE is cost-effective from the perspective of 

participants and society. Project GATE was not cost effective from the non-participant 

(government) perspective partly due to increased UI benefits collected by participants and the 

amount spent by DOL on providing GATE services. 

For Project GATE to be cost-effective from society’s perspective for the full sample, society 

must accrue additional net benefits from Project GATE amounting to more than $1,891 per 

person (Table VIII.7). This may not be out of reach, however, since we almost certainly 

underestimated a number of the inputs to the cost-benefit analysis, as discussed immediately 

below, resulting in a very conservative estimate of the value of a program such as GATE to 

society. 

First, as discussed in the analysis of business earnings in Chapter VI, the self-employed are 

prone to underreport their earnings. Since the program group was more likely to be selfemployed than the control group, the earnings impacts are likely to be underestimated. Second, 

job creation was not incorporated into the cost-benefit calculations. That is, the impact on nonparticipants’ earnings resulting from business creation was not incorporated into the cost-benefit 

estimates. In Chapter VI we reported that the program group created 187 more businesses than 

the control group. Furthermore, program group members employed 170 more full time 

equivalent (FTE) employees than control group members. Using a conservative figure of 

$15,110 for annual wages (BLS 10th

As in most benefit-cost analyses, we had to deal with uncertainties in estimating benefits and 

costs, which we chose to resolve in a very conservative manner. Our overall conclusion is that, 

taking into account the conservative nature of our estimates, GATE is cost effective from 

society’s perspective. 

percentile annual wage for 2005) for these 170 FTEs yield

an additional potential benefit to non-participants and society of approximately $2,000 from this 

element of the analysis alone.
Evaluation of Project GATE 151 December 2009

8.5 Conclusion

Using impact estimates from previous chapters, in this chapter we presented the benefit-cost 

analysis of Project GATE. Key findings are: 

• During the follow-up period, program group members earned more, on average,

from businesses than control group members. The full sample earned on average, 

approximately $1,100 more; the UI recipient subgroup earned, on average, $3,100 

more. 

• The cost to the Department of Labor (DOL) of providing GATE services was 

approximately $1,300 per program group member.

• The main cost of Project GATE was the loss of wage and salary earnings while 

starting a business. The full sample earned on average, approximately $1,500 less; 

the UI recipient subgroup earned, on average, $1,100 less. 

• For the full sample, the measured benefits of Project GATE exceeded its measured 

costs from the perspectives of participants. 

• For the UI recipient subgroup, the measured benefits of Project GATE exceeded its 

measured costs from the perspectives of participants and society.

• Since our methodology of dealing with estimation uncertainty was uniformly 

conservative, our overall conclusion is that the actual benefits of Project GATE most 

likely exceeded its costs from the perspective of society.
Evaluation of Project GATE 152 December 2009

CHAPTER IX.

LESSONS LEARNED AND POLICY IMPLICATIONS

The evaluation of Project GATE was designed to address (1) whether Project GATE works, (2) 

whether it could be replicated on a broader scale, and (3) whether it is cost-effective. The 

evidence presented in this report suggests that Project GATE works and that it could be 

replicated on a wider scale. The answer to whether it is cost-effective is more complex. In this 

report, based on a 60-month follow-up period, we find that, for the full sample, Project GATE is 

cost-effective from only the participants’ perspective. For those who were UI recipients at 

random assignment, Project GATE is cost-effective from both participants’ and society’s 

perspectives. 

The remainder of this chapter discusses a number of general lessons learned from the evaluation 

of Project GATE and implications for future policy and research in regard to self-employment.

1. Self-employment service programs could be offered at One-Stop Career Centers. 

Project GATE could be replicated on a wider scale. During the demonstration, Project GATE 

was implemented successfully across a wide variety of sites. While One-Stop Career Centers are 

not traditionally known as places to go for self-employment services, Project GATE was able, 

with some marketing, to draw entrepreneurs and prospective entrepreneurs into the centers. As 

long as local training and business counseling providers with a reputation for providing good 

quality services are willing to participate in the program, Project GATE, or a similar program, 

could be offered as an additional service at One-Stop Career Centers.

2. Project GATE increased receipt of self-employment services by an average of 13 hours 

per participant. The evaluation was designed to examine the impact of adding Project GATE to 

the array of self-employment programs already available in the communities. Hence, control 

group members were not prevented from receiving other services in the community. During the 

first 18 months after random assignment, about 60 percent of control group members received 

some self-employment services, compared with 88 percent of the program group. Project GATE 

led to an average increase of 13 hours of services, which consisted of 8 more hours of classroom 
Evaluation of Project GATE 153 December 2009

training, 2 more hours of business counseling, and 3 more hours of other self-employment 

services.

3. The Project GATE service model appears to have several advantages over the existing 

self-employment services available within participating communities. As well as receiving 

more hours of self-employment services, Project GATE participants reported higher levels of 

satisfaction with the services received than did control group members. Offering a one-on-one 

assessment with a trained business counselor and a choice of quality local service providers 

appears to have added value to the existing service network within these local communities. 

4. GATE participants started businesses at a higher rate than control group members. 

Over the 60-month follow-up period, participation in Project GATE led to an increase in 

business ownership. While the increase in business ownership was statistically significant in the 

first few quarters after random assignment, the impact dissipated over time. By the time of 

Wave 3, the business ownership percentage was the same for the program and control groups. 

However an analysis of the impact of Project GATE on UI recipients found more substantial 

program impacts. 

5. Increased business ownership did not lead to a statistically significant increase in selfemployment earnings. Reported earnings from businesses for both program and control group 

members were small. Even though program group members were more likely to own a business, 

Project GATE did not have a statistically significant impact on business earnings in any quarter. 

Over the 16-quarter observation period, however, the program group members earned 

approximately $3,000 more than control group members (not statistically significant). 

6. Measured Net Benefits of Project GATE. DOL spent about $1,300 per program group 

member to provide Project GATE services. In addition, while working on their businesses, 

GATE participants worked less in wage and salary jobs than control group members, especially 

in the first few quarters after applying to the program. Throughout the 16-quarter follow-up 

period, earnings from wage and salary jobs fell, on average, by about $1,500 for the full sample; 

and by about $1,100 for the UI recipient subgroup. The additional earnings from businesses 

begun by GATE participants increased, on average, by about $1,100 for the full sample and 

about $4,700 for the UI recipient subgroup. For the full sample, the increase in self-employment 
Evaluation of Project GATE 154 December 2009

earnings was not sufficient to make GATE cost effective from the perspective of nonparticipants or society. However, for those who were UI recipients, the increase in selfemployment earnings was sufficient to make GATE cost-effective from the perspective of 

participants and society.

7. Policy Implications. Project GATE was designed to test the effectiveness of selfemployment services. Almost anyone, whether employed or unemployed, who was interested in 

starting or expanding a business was eligible to participate in Project GATE. More than half of 

the applicants to Project GATE were not working when they applied to Project GATE. Thus, the 

unemployed represent a very important subgroup of the GATE sample. 

Impact results presented in this report indicate that Project GATE was more effective for the UI 

recipient subgroup than for the broader population of GATE participants. These findings are 

particularly important because they corroborate the findings of the evaluation of a similar selfemployment training program (the UI Self-Employment Demonstration). Thus, DOL policy 

makers now have results from two different rigorous experimental design evaluations. Both 

studies conclude that self-employment training programs are an effective policy tool for assisting 

the unemployed. 

Thus, the results of this report suggest that DOL should initiate a new self-employment training 

program similar to Project GATE in all states. The currently available SEA program is operating 

in only nine states and is only available to individuals who are profiled as likely to exhaust their 

benefits. The new GATE-like program should differ from the SEA program in a number of 

important respects. Specifically, the new program should be available nationwide and should be 

accessible to all UI claimants who are interested in self-employment irrespective of their 

profiling score. Clearly, an important change of this type would require new Federal legislation. 

Such a GATE-like program may be especially effective in recessionary periods when few wage 

and salary jobs are available. During difficult economic times, the opportunity cost for engaging 

in self-employment training is significantly decreased. Since employment opportunities are 

scarce, the individual can dedicate more time to starting their business. In this case, self 

employment training is a win-win proposition because it promotes both workforce development 

for the unemployed individual and economic development for the local economy. A program of 
Evaluation of Project GATE 155 December 2009

this nature should be acted on soon rather than waiting for the next recession as by then it may be 

too late to gather support for enacting a new program.

8. Future Research. Since the completion of the initial Project GATE demonstration, DOL 

awarded four state grants to test the effectiveness of extending the GATE model to two special 

dislocated worker populations: rural workers and older workers. These four state grants 

(Alabama, North Carolina, Minnesota, and Virginia) are collectively known as GATE II. A 

rigorous impact evaluation of these grants is currently underway to determine the effectiveness 

of the GATE model for these two dislocated worker groups. 

While older dislocated workers and rural dislocated workers may represent important target 

populations for self-employment training services, they are by no means the only groups who 

may benefit from such services. There are many other target groups that could potentially 

benefit from self-employment training services: veterans, individuals with disabilities, and 

military spouses are such possible subgroups. Future GATE grants, combined with rigorous 

evaluation of their effectiveness, would provide DOL with information that can further improve 

the targeting of GATE services. 

DOL may also wish to revisit the two original UI Self-Employment Demonstrations to test a 

potentially promising variation in the program design. The original demonstrations in 

Washington State and Massachusetts tested two approaches to providing unemployment benefits 

to UI claimants wishing to start their own business. In Washington State, a lump-sum payment 

model was tested, while in Massachusetts a periodic payment model was tested. History shows 

that the model tested in Massachusetts was the more promising and later evolved into the SEA 

program. 

What DOL did not test, however, was a combination of the two approaches. One possible 

variation of the original design is to provide UI claimants smaller periodic payments in 

combination with milestone bonus payments upon completion of, for example, their business 

plan and establishment of their business. 

During each wave of the Project GATE survey, respondents consistently stated that a major 

impediment to starting a business was lack of access to capital. In the proposed new 
Evaluation of Project GATE 156 December 2009

demonstration, the successful periodic payment approach would be maintained while providing 

prospective entrepreneurs access to capital to start their business. Program participants would 

still receive a weekly unemployment check, albeit a smaller amount, while remaining eligible to 

receive lump-sum bonus payments at critical stages in their business development. While many 

design details remain, the authors believe that a demonstration program incorporating a 

combination of (a) self-employment training, (b) periodic payments, and (c) lump-sum payments 

would be an important next research step in this area.
Evaluation of Project GATE 157 December 2009

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Evaluation of Project GATE Appendix A-165 December 2009

APPENDIX A. DATA COLLECTION FOR IMPACT ANALYSIS

This appendix describes the collection of data used in the analysis of the impacts of Project GATE. 

The data come from three sources:

• The GATE application packet

• Three waves of a follow-up survey

• State Unemployment Insurance (UI) agencies

We discuss each data source in turn.

A.1 GATE Application Packet

All persons who attended a GATE orientation were offered a GATE application packet. To apply 

to Project GATE, persons were required to complete the application package and send it to 

IMPAQ International. If IMPAQ International found that the applicant was eligible for Project 

GATE, had completed most of the package, and had not previously applied to Project GATE, he or 

she was randomly assigned to the program or control group. 

The application package collected detailed background information. This information included:

Demographic and Socioeconomic Characteristics – The package asked for information 

on age, gender, race/ethnicity, highest grade of education completed, marital status, 

household size, number of children, country of birth, primary language, U.S. citizenship, 

and whether the applicant had a health problem or disability that limited the type of work 

he or she could do.

• Income – The package asked for information on total household income over the

previous year. It also asked whether the applicant was receiving Temporary 

Assistance for Needy Families (TANF), Supplemental Security Income, General 

Assistance, food stamps, Social Security benefits, or other benefits. The application 
Evaluation of Project GATE Appendix A-166 December 2009

package also asked whether the applicant was receiving UI benefits and the number of 

weeks the applicant received UI over the past 12 months.

• Previous Self-Employment Experiences – The package asked whether the applicant 

had ever been self-employed, whether he or she was currently self-employed, the 

number of years the applicant was self-employed, the date the previous business was 

begun and ended, the number of employees the business hired, and whether any close 

relatives or friends owned a business and whether the applicant worked for that 

business.

• Wage and Salary Work Experiences – The package asked whether the applicant was 

currently working for themselves and/or for someone else, unemployed, or out of the 

labor force. Detailed information about the current or last wage and salary job held by 

the applicant, such as wage rate was also requested. 

• Business Idea – The application package asked for a short description of the business 

that the applicant wanted to start or grow. It also asked whether the applicant was 

already operating this business, and if so, how long he or she had been operating it. 

The package also asked whether the applicant ever operated a business similar to the 

one he or she proposed to start or grow, whether the business would build on skills or 

knowledge acquired while working for someone else or pursuing a hobby, whether the 

applicant planned to operate the business out of his or her home, whether the applicant 

had a location in mind, and whether the applicant had written a formal business plan 

for the business.

• Factors that May Affect Likelihood of Business Success – The application package 

collected information about the financial and emotional support provided by the 

applicant’s family, and the applicant’s access to a car, telephone, computer, and bank 

account. It also asked about 13 personal character traits that are thought to affect the 

likelihood of self-employment success, such as the ability to work independently. The 

package also asked about the reasons for the applicant’s interest in self-employment. 

Table A.1 compares selected background information across program and control groups.
Evaluation of Project GATE Appendix A-167 December 2009

 

In addition, the application package collected detailed contact information necessary to perform 

random assignment, notify the applicant about their assignment, and locate the applicant for 

follow-up surveys. The package also asked the applicant to consent to participate in the study.

Table A.1: Selected Background Characteristics of Program and Control Groups

Program 

Group 

Mean

Control 

Group 

Mean Difference

Male 0.53 0.54 -0.01

Age (average in years) 42.09 42.75 -0.65**

Race/Ethnicity

 White and not Hispanic/Latino 0.54 a 0.53 0.00

 Black and not Hispanic/Latino 0.29 a 0.30 -0.01

 Other 0.17 0.16 0.01

Born in the United States 0.90 0.90 0.00

United States Citizen 0.96 0.96 0.00

Highest Grade Completed (average in years) 14.39 14.51 -0.13*

Household Income

 Less than $10,000 0.12 0.10 0.02**

 $10,000 to $24,999 0.24 0.24 -0.01

 $25,000 to $49,999 0.33 0.34 -0.01

 $50,000 to $74,999 0.18 0.17 0.01

 $75,000 to $99,999 0.07 0.07 0.00

 $100,000 or more 0.06 0.07 -0.01

Status if Neither Employed Nor Owned a Business

 Looking for work 0.72 0.75 -0.02

 Trying to become self-employed 0.30 0.29 0.01

 Attending school or training 0.15 0.13 0.02

 Taking care of a family member 0.07 0.06 0.01

 Retired 0.03 0.02 0.01

 Disabled 0.03 0.03 0.00

 Other 0.06 0.05 0.00

Months Since Last Job Endedb (Average) 14.73 16.88 -2.15

Currently Receiving Unemployment Insurance (UI) 0.40 0.38 0.02

Received UI in Past Year 0.48 0.49 -0.01

Number of Weeks Received UI in Past Year 11.93 13.42 -1.49***

Ever Self Employed 0.35 0.38 -0.03**

Total Years of Self Employment 5.71 b 5.64 0.07

Weeks Self-Employed During Past Yearb (Average) 19.20 18.44 0.76

Currently Self Employed 0.18 0.20 -0.01

Years in Current or Most Recent Businessb (Average) 5.14 4.99 0.14
Evaluation of Project GATE Appendix A-168 December 2009

Program 

Group 

Mean

Control 

Group 

Mean Difference

Typical Hours Per Week Worked at Business 34.74 35.21 -0.47

Business Considered a Financial Success 0.54 0.53 0.01

Largest Number of Employees, Excluding Self 6.08 9.06 -2.99

Family or Close Relatives Ever Self Employed 0.71 0.72 0.00

Ever Work for Self-Employed Relative 0.46 c 0.46 0.00

Ever Worked in Wage and Salary Job 0.99 0.99 0.00

Currently Working in Wage and Salary Job 0.30 0.30 0.00

Typical Hours Worked Per Week (Average) 39.49 39.65 -0.16

Hourly Wage (Average) 16.87 17.23 -0.36

Ever Worked in Managerial Capacity 0.63 0.63 -0.01

Years Worked in Managerial Capacityd (Average) 7.25 7.85 -0.60**

Credit

 Have a credit history 0.96 0.96 0.00

 Have had credit problems in the past 0.48 e 0.47 0.01

Household Income

 Someone else will work to support family 

 while applicant works on business 0.45 0.46 -0.01

Average weekly earnings of family member 776.38 f 785.11 -8.73

Health Insurance Coverage

 Currently have health insurance 0.70 0.69 0.01

Level of Family Support for Self Employment

 Very supportive 0.76 0.75 0.01

 Fairly supportive 0.14 0.15 -0.01

 Neither supportive or unsupportive/fairly 

 unsupportive/unsupportive 0.10 0.10 0.00

Applicants’ Assessment of their Personalities

I enjoy working independently 1.18 1.20 -0.02

I finish projects even if they involve a great deal of 

work 1.22 1.20 0.01

I am willing to work long hours for my business 1.28 1.28 0.00

I have innovative ideas 1.36 1.32 0.04**

I often take the initiative to start things 1.27 1.27 0.00

If something “can’t be done,” I find a way 1.39 1.43 -0.04*

I’m willing to take a risk even if I am sure everything 

will work out 2.89 g 2.89 0.00

I can handle challenges and persist during difficult 

times 1.26 1.24 0.02

I communicate easily with people who have different 

types of personalities 1.36 1.36 -0.01

I take advice from others 1.49 1.49 0.00

I’m a good motivator 1.46 1.46 0.00

I have clearly defined long and short term goals 1.76 1.76 0.00
Evaluation of Project GATE Appendix A-169 December 2009

Program 

Group 

Mean

Control 

Group 

Mean Difference

I do not often miss deadlines 1.63 g 1.68 -0.05

I am an organized person 1.64 1.63 0.01

I do not have a difficult time making up my mind 2.10 g 2.12 -0.03

I work well under pressure 1.52 1.50 0.02

I have a sense of humor 1.28 1.28 0.00

I am prepared to risk my savings for my business 2.37 g 2.38 0.00

I am willing to lower my standard of living while my 

business gets started 1.70 1.70 0.00

I do not get sick often 1.38 g 1.39 -0.01

I often find more than one solution to a problem 1.48 1.47 0.01

Total Score on Personality Assessment

Mean 93.02 92.97 0.05

Reasons for Starting a Business

Be Own Boss 0.83 0.84 -0.01

Use Talents 0.77 0.77 0.00

More Income 0.76 0.77 -0.01

Realize Dream 0.76 0.75 0.01

Pursue Interest 0.70 0.69 0.01

Flexible Schedule 0.58 0.59 -0.01

Avoid Unemployment 0.44 0.43 0.01

Work at Home 0.33 0.32 0.01

To help others/community 0.09 0.10 -0.01

Number of Applications 2,094 2,103 4,197

Source: Project GATE Application Forms. a

Excludes those who reported multiple races.bFor those who were ever self employed. c

For those who had a family member who was self employed.

d

For those who ever worked in a managerial capacity.

e

For those with a credit history.

f

For those with a family member who will support family.

g

*/**/***Estimate significantly different from zero at the 0.10/0.05/0.01 level.

The percent who believe the negative statement is “very untrue.”
Evaluation of Project GATE Appendix A-170 December 2009

In Table A.1, the total number of applicants is 4,197. Elsewhere in this report, as well as in the 

earlier report prepared after Wave 2 of the follow-up survey was completed; the total number of 

applicants was reported as 4,198. The difference is due to one individual who was found to be 

non-randomly assigned and who was removed from the analysis conducted for this report. 

Because removing this individual changes the weights only very slightly, no conclusions of this 

report were affected by this change. 

A.2 Three Waves of a Follow-Up Survey

A telephone survey was first attempted with all sample members at about 6 months after random 

assignment (Wave 1) and then again with all respondents to the first survey at about 18 months 

after random assignment (Wave 2). The third telephone survey was conducted with respondents to 

the second survey about 60 months after random assignment (Wave 3).

A.2.1 Content of Questionnaires

The three follow-up surveys collected a similar set of information. However, the first follow-up 

survey was used to collect information about the sample members’ experiences over the first six 

months after random assignment, and the second and third surveys were used to collect 

information about the time since they were last surveyed—approximately 12 and 60 months, 

respectively.

The information collected by the surveys included:

• Receipt of Self-Employment Services from Project GATE and Other Providers – The 

surveys provided data on self-employment services that the sample members received 

from Project GATE and other programs; this included training classes, one-on-one 

counseling, mentoring, and peer support. Comparable data on self-employment 

services were collected for both program and control group members. The surveys 

also collected information on the intensity and duration of the services, satisfaction 

with the services, and the perceived usefulness of different components of the services. 

• Completion of Business Plans and Loan Applications – The surveys asked whether 

the sample member had completed a business plan. They also asked about any loan 
Evaluation of Project GATE Appendix A-171 December 2009

applications and other sources of business financing. The sample member was also 

asked whether he or she received assistance in developing the plan or applying for a 

loan from a self-employment service provider.

• Business Development – The surveys collected detailed information about whether the 

sample member was operating a business. They asked about the development or 

growth of businesses owned by the sample member since random assignment. 

Information collected included the start and end date of the business, earnings from the 

business, the product or service produced by the business, how the business was 

acquired, how much capital was put into the business, where it was located, the 

amount of sales and expenses, the number of employees, and if a business ended, 

whether the business was closed or sold.

• Employment – Together, the surveys collected a complete 60-month history of all 

employment since random assignment, including both self-employment and working 

for someone else. Data collected included earnings, hours worked, and fringe benefits 

received. The surveys also asked about satisfaction with employment, be it from 

working for oneself or someone else.

• Household Income and Receipt of Public Assistance – Each survey collected 

household income data for the past 12 months. Information was also collected on the 

earnings and fringe benefits of other household members. The surveys collected 

information on the receipt of retirement benefits, welfare benefits, and other public 

assistance.

In addition to the bulleted list above, the surveys collected some information about the perceived 

barriers to starting a business. The surveys also collected information on some demographic and 

socio-economic characteristics that may change over time, such as marital status.

A.2.2 Survey Response Rates

Of the 4,197 GATE applicants, 82 percent responded to Wave 1 of the survey, 72 percent 

responded to Wave 2 of the survey and 58 percent responded to Wave 3 of the survey. Table A.2 
Evaluation of Project GATE Appendix A-172 December 2009

presents the overall response rates and the response rates by site and by program and control 

group.

Table A.2: Response Rates

The overall response rate for Wave 3 of the survey was higher for the program group than the 

control group (82 percent compared with 80 percent). The response rate for the program group 

was higher than the control group in each site except Maine. A similar pattern occurred for the 

Wave 1 and Wave 2 surveys.
Evaluation of Project GATE Appendix A-173 December 2009

The response rates differed quite substantially by site. The response rate was highest in 

Minneapolis/St. Paul (76 percent for Wave 2 and 84 percent for Wave 3) and lowest for 

Philadelphia (63 percent for Wave 2 and 74 percent for Wave 3). 

Given the slightly higher response rates for program group members in all three waves, there may 

be some concern regarding differential attrition rates between the program and control groups. 

However, the results in Table A.3 should alleviate this concern. That is, the results in Table A.3 

reveal that the characteristics of program and control group members at the five-year follow-up 

(i.e., at wave 3) were very similar. 

Table A.3: Selected Background Characteristics of Program and Control Groups

Wave 3 Respondents

Program 

Group 

Mean

Control 

Group 

Mean

Difference

Male 0.52 0.53 -0.01

Age (average in years) 43.91 44.15 -0.24

Race/Ethnicity

 White and not Hispanic/Latino 0.61 a 0.62 -0.01

 Black and not Hispanic/Latino 0.24 a 0.25 -0.01

 Other 0.15 0.13 0.02

Born in the United States 0.93 0.92 0.01

United States Citizen 0.97 0.98 0.00

Highest Grade Completed (average in years) 14.75 14.78 -0.03

Household Income

 Less than $10,000 0.08 0.08 0.00

 $10,000 to $24,999 0.22 0.24 -0.01

 $25,000 to $49,999 0.32 0.35 -0.03

 $50,000 to $74,999 0.20 0.17 0.03*

 $75,000 to $99,999 0.08 0.07 0.01

 $100,000 or more 0.09 0.09 0.00

Status if Neither Employed Nor Owned a Business

 Looking for work 0.74 0.75 -0.01

 Trying to become self-employed 0.32 0.32 0.00

 Attending school or training 0.13 0.11 0.02

 Taking care of a family member 0.06 0.06 0.00

 Retired 0.03 0.02 0.01

 Disabled 0.02 0.03 0.00
Evaluation of Project GATE Appendix A-174 December 2009

Program 

Group 

Mean

Control 

Group 

Mean

Difference

 Other 0.05 0.06 -0.01

Months Since Last Job Endedb (Average) 14.99 18.23 -3.24

Currently Receiving UI 0.43 0.41 0.02

Received UI in Past Year 0.50 0.52 -0.02

Number of Weeks Received UI in Past Year 11.89 14.00 -2.11***

Ever Self Employed 0.37 0.42 -0.05**

Total Years of Self Employment 6.07 b 5.79 0.28

Weeks Self-Employed During Past Year 19.92 b 18.79 1.13

Currently Self Employed 0.20 0.22 -0.02

Years in Current or Most Recent Business 5.24 b 5.09 0.15

Typical Hours Per Week Worked at Business 32.70 34.48 -1.79

Business Considered a Financial Success 0.51 0.55 -0.04

Largest Number of Employees, Excluding Self 5.72 12.58 -6.86

Family or Close Relatives Ever SE 0.74 0.74 0.00

Ever Work for Self-Employed Relative 0.43 c 0.43 -0.01

Ever Worked in Wage and Salary Job 0.99 0.99 0.00

Currently Working in Wage and Salary Job 0.29 0.28 0.00

Typical Hours Worked Per Week (Average) 39.36 39.62 -0.26

Hourly Wage (Average) 18.24 17.96 0.29

Ever Worked in Managerial Capacity 0.66 0.66 0.00

Years Worked in Managerial Capacity 7.87 d 8.45 -0.59

Credit

 Have a credit history 0.97 0.97 0.01

 Have had credit problems in the past 0.41 e 0.41 -0.01

Household Income

 Someone else will work to support family 

 while applicant works on business 0.47 0.46 0.00

Average weekly earnings of family member 832.48 f 780.76 51.73

Health Insurance Coverage

 Currently have health insurance 0.73 0.71 0.02

Level of Family Support for Self Employment 0.74 0.73 0.02

 Very supportive 0.16 0.16 0.00

 Fairly supportive 0.10 0.11 -0.01

 Neither supportive or unsupportive/fairly 

 unsupportive/unsupportive 0.73 0.71 0.02

Applicants’ Assessment of their Personalities

I enjoy working independently 1.20 1.21 -0.01

I finish projects even if they involve a great deal 

of work 1.23 1.23 0.00

I am willing to work long hours for my business 1.35 1.32 0.03

I have innovative ideas 1.37 1.33 0.04

I often take the initiative to start things 1.29 1.28 0.01
Evaluation of Project GATE Appendix A-175 December 2009

Program 

Group 

Mean

Control 

Group 

Mean

Difference

If something “can’t be done,” I find a way 1.43 1.45 -0.01

I’m willing to take a risk even if I am sure 

everything will work out 2.86 g 2.89 -0.03

I can handle challenges and persist during 

difficult times 1.28 1.25 0.03

I communicate easily with people who have 

different types of personalities 1.38 1.38 0.00

I take advice from others 1.50 1.52 -0.02

I’m a good motivator 1.51 1.50 0.01

I have clearly defined long and short term goals 1.84 1.85 -0.01

I do not often miss deadlines 1.63 g 1.70 -0.07*

I am an organized person 1.69 1.67 0.02

I do not have difficult time making up my mind 2.14 g 2.18 -0.03

I work well under pressure 1.56 1.52 0.04

I have a sense of humor 1.28 1.28 0.01

I am prepared to risk my savings for my business 2.41 g 2.47 -0.07

I am willing to lower my standard of living 

while my business gets started 1.75 1.71 0.04

I do not get sick often 1.37 g 1.39 -0.01

I often find more than one solution to a problem 1.49 1.49 0.00

Total Score on Personality Assessment

Mean 92.40 92.37 0.03

Reasons for Starting a Business

Be Own Boss 0.83 0.84 -0.01

Use Talents 0.77 0.78 -0.01

More Income 0.74 0.75 -0.01

Realize Dream 0.76 0.75 0.01

Pursue Interest 0.71 0.70 0.01

Flexible Schedule 0.59 0.59 0.00

Avoid Unemployment 0.43 0.43 0.00

Work at Home 0.35 0.33 0.02

To help others/community 0.08 0.10 -0.02

Number of Applications 1,274 1,176 2,450

Source: Project GATE Application Forms. a

Excludes those who reported multiple races.

b

For those who were ever self employed.

c

For those who had a family member who was self employed.

d

For those who ever worked in a managerial capacity.

e

For those with a credit history.

f

For those with a family member who will support family. g

*/**/***Estimate significantly different from zero at the 0.10/0.05/0.01 level.

The percent who believe the negative statement is “very untrue.”
Evaluation of Project GATE Appendix A-176 December 2009

A.3 State Unemployment Insurance Agencies

Data on employment, earnings, and receipt of UI benefits were requested from the state UI 

agencies for all 4,198 GATE applicants who were randomly assigned.

A.3.1 Data Collection Strategy

UI wage records and UI benefits data were collected from the state UI agency in the three states—

Pennsylvania, Minnesota, and Maine. A list of the social security numbers of all GATE 

applicants was sent to the state UI agency. The state agency matched UI wage and benefit records 

to each social security number and returned a dataset with UI wage records and benefits data for 

each social security number that was successfully matched. If an applicant’s social security 

number did not match records on databases at the state UI agency, we assumed this meant that the 

customer did not receive UI-covered earnings (or did not establish a UI claim, depending on the 

database) during the time period covered by the evaluation. 

A.3.2 UI Wage Records

Employers in most states are required to maintain and submit earnings records to the state’s UI 

system for workers in jobs covered by UI. These records, which are maintained in machinereadable format, are used to determine workers’ eligibility for UI if they are laid off.

The UI wage records include most, but not all, earnings. UI wage records consist of total quarterly 

earnings reported by employers to state UI agencies for each employee. By law, most employers 

are subject to a state UI tax and must report what is paid to each employee, including regular 

earnings, overtime, and tips and bonuses. In most states, the Federal Unemployment Tax Act 

(FUTA) applies to employers who (1) paid wages of $1,500 or more during any calendar quarter in 

the current or preceding calendar year, or (2) employed at least one worker for at least one day in 

each of the 20 weeks during the current or preceding calendar year. 

Most workers are covered under FUTA, but there are some excluded categories. In particular, UI 

wage records do not cover federal workers, military staff, or self-employed people. Other workers 

excluded from coverage under the FUTA provisions include railroad employees, workers in 

service for relatives, most agricultural labor (except workers on large farms), domestic service 
Evaluation of Project GATE Appendix A-177 December 2009

workers whose employers paid less than $1,000 in wages in any calendar quarter, part-time 

employees of nonprofit institutions, some students employed by their schools, insurance and real 

estate agents on commission, and workers performing “casual labor” not in the course of the 

employer’s business (U.S. Department of Labor 2004).

We received quarterly wage records from each state for the third quarter of 2001 to the second 

quarter of 2006. As the applicants were randomly assigned between September 2003 and July 

2005, we have at least two years of data prior to random assignment and one year of data after 

random assignment for nearly all sample members. 

The earnings data received from each state contain quarterly earnings data for each reported job. 

For each state and calendar quarter available, we constructed total quarterly earnings for each 

sample member by summing reported earnings from each of the customer’s employers. 

For the analysis, we needed a measure of earnings for quarters measured in relation to random 

assignment rather than calendar quarters. To do this, we defined “the first quarter after random 

assignment” as the calendar quarter during which the customer was randomly assigned if he or she 

were randomly assigned in the first half of the calendar quarter, and as the calendar quarter after 

the customer was randomly assigned if he or she was randomly assigned in the second half of the 

calendar quarter. For example, if a sample member was randomly assigned on November 14, 

2004, the fourth quarter in 2004 was designated as the first quarter after random assignment; if the 

customer was randomly assigned on November 16, 2004, the first quarter of 2005 was designated 

as the first quarter after random assignment. We also experimented with counting the first 

calendar quarter that does not include random assignment as the “first quarter after random 

assignment” and obtained similar findings.

A.3.3 Benefits 

The UI benefits data cover all claims filed between July 2000 and July 2006. Hence, we have 

information about all claims established in the three years prior to random assignment and the year 

after random assignment. The data provided by the states included the date the benefit year began, 

the maximum benefit amount (the total benefits amount awarded to the customer), the remaining 

balance (the total amount of the award not yet paid to the customer), the weekly benefit amount 
Evaluation of Project GATE Appendix A-178 December 2009

(the maximum amount the customer could receive per week), the claim type, and the first and last 

compensable weeks (weeks that the customer could receive benefits).
Evaluation of Project GATE Appendix B-179 December 2009

APPENDIX B. SURVEY NONRESPONSE 

AND MISSING VALUES

This appendix describes our approach to dealing with missing data. We begin by describing our 

approach to dealing with missing data that occurs because a sample member did not respond to a 

survey at all. Then we discuss our approach to dealing with missing data that occurs because a 

sample member did not respond to a specific question on the survey.

B.1Treatment of Survey Nonresponse

The evaluation design for Project GATE included three follow-up telephone surveys, one about 6 

months after random assignment (Wave 1), one about 18 months after random assignment (Wave 

2), and one about 60 months after random assignment (Wave 3). Of the 4,197 GATE applicants, 

3,450 responded to the Wave 1 survey (an 82 percent response rate), 3,039 responded to the 

Wave 2 survey (a 72 percent overall response rate) and 2,450 responded to the Wave 3 survey (a 

58 percent overall response rate). Response rates, by site and research group (program and 

control), are presented in Table A.2. 

Although response rates were fairly high, impact estimates could be biased if survey respondents 

differed from nonrespondents in ways that are correlated with outcomes of interest. To adjust for 

differences in observed characteristics between respondents and nonrespondents, we created 

weights for each respondent for the Wave 1, Wave 2 and Wave 3 surveys.

The first step to creating weights for nonresponse was estimating logistic regression models of 

the probability that a sample member responded to the survey. The models were estimated using 

the full sample of 4,197 applicants. The dependent variable was whether the sample member 

had responded to the survey. Any characteristic of the GATE applicant that may be correlated 

with survey response and was reported on the GATE application package was a candidate to be a 

covariate in the model.

For each wave of the survey, the best set of covariates for the nonresponse model was chosen by 

comparing the following measures of predictive ability and goodness of fit: the R-squared 

statistic, Akaike’s Information Criterion (Akaike 1974), the percentage concordant and 
Evaluation of Project GATE Appendix B-180 December 2009

discordant (Agresti 1996), and the Hosmer-Lemeshow goodness-of-fit test (Hosmer and 

Lemeshow 1989). It also involved reviewing the statistical significance of the coefficients of the 

covariates in the model and avoiding any unusually large adjustment factors. 

For the Wave 1, 2 and 3 survey nonresponse models, the following characteristics were 

important indicators of response propensity: age, gender, race/ethnicity, income level, primary 

language, education, and indicators of whether the applicant had a bank account, was currently 

self employed, had a relative who was self employed, was disabled, had managerial experience,

had problems with credit history, had ever received unemployment benefits, was ever married, 

was currently responsible for care of family members during the day, family was very supportive 

of the business endeavor, had ever worked for a relative, had health insurance, household size, 

number of children in household, was ever self-employed, had ever worked, had a telephone, and 

had a computer.

The second step in creating nonresponse weights was to use the predicted values from the 

response propensity models to create weighting cells. Twenty broad groups were defined by the 

20 possible combinations of three categorical variables: site (five categories, counting the three 

sites in Maine as a single site), research group (program/control) (two categories), and whether 

the sample member was in a business partnership with another sample member (two categories). 

Within each of these twenty broad groups, five weighting cells were created that were 

determined by the size of the predicted likelihood that the sample member responded to the 

survey. This resulted in a total of 100 (5 x 20) weighting cells. The same nonresponse weight 

was assigned within each of these 100 cells.

The third step was to create the nonresponse weight for each cell. The nonresponse weight was 

calculated by dividing the total number of sample members in each cell by the total number of 

survey respondents in each cell. For example, consider an applicant in Maine who was assigned 

to the control group and was part of a business partnership with another GATE applicant. 

Suppose that this applicant had a response propensity based on the logistic model of 0.75. This 

would put her in the lowest of the five ranked cells within her broad group. There were only five 

applicants within this cell (including the applicant described above). Of those five applicants, 
Evaluation of Project GATE Appendix B-181 December 2009

three responded to the Wave 1 survey. Hence, if the applicant responded to the Wave 1 survey, 

her Wave 1 nonresponse weight would be 5/3 = 1.67.

As described in Chapter II, some GATE applicants were business partners with other GATE 

applicants. If GATE applicants in the same business partnership were assigned to different 

research groups (one to the program group and one to the control group, for example), there was 

potential for contamination of the control group member(s). To remove this potential source of 

contamination, sample members in business partnerships with members in both research groups 

were given a weight of zero. This effectively removed these business partnerships from the 

analysis sample. To ensure that business partnerships were not, however, underrepresented in 

the analysis file, the weights of other business partnerships in the same site and research group 

were adjusted upwards. 

As a final step, because the outcomes for applicants in business partnerships are not independent, 

the weights for applicants within business partnerships were adjusted so that the sum of the 

weights for members in each business partnership was equal to the weight for one non-partnered 

applicant. For example, three business partners applied to Project GATE in Minneapolis/St. 

Paul, were all assigned to the program group, and all responded to the Wave 1 survey. The 

nonresponse weight for each of these applicants was 1.08. The weight was adjusted to 2.38 

because of other business partners in Minneapolis/St. Paul who were assigned a weight of zero 

due to concerns about contamination described earlier. To account for the fact that the outcomes 

for applicants in business partnerships are not independent, the weight for each of these three 

sample members were divided by three (2.38/3 =0.79). The sum of all the nonresponse weights 

is equal to 4,071, which is the number of applicants who applied to Project GATE without a 

business partner (3,953) plus the number of businesses represented by the applicants who applied 

with a business partner (118).

B.2Treatment of Item Nonresponse

Some respondents responded to most of a survey but refused to answer particular questions or 

responded to questions by saying “I don’t know.” This is referred to as item nonresponse and 

can lead to a bias in impact estimates, and also reduce the statistical power if such cases were 
Evaluation of Project GATE Appendix B-182 December 2009

deleted. To alleviate this source of bias, we imputed values for most variables that had missing 

values.

Table B.1 presents the variables for which we imputed values when they were missing and the 

percentage of nonresponse for the variable. The level of nonresponse to the question is 

calculated only over sample members who were eligible to answer the question, based on the 

skip pattern in the survey instrument. For example, in the Wave 3 survey instrument, the percent 

of nonresponse to the question in the survey about the number of businesses owned since random 

assignment (question C3) was calculated only over those respondents who answered that they 

had been self-employed since the last interview (question C1).

Table B.1: Rate of Nonresponse for Variables for Which Missing Values Were Imputed

Levels of Item Nonresponse Among Eligible 

Cases (in %)

Description Wave 1 

Survey

Wave 2 

Survey

Wave 3 

Survey

Self-employed since random assignment 

(RA) 0.09 0.14 0.12

Number of businesses owned since RA 0.14 0.29 0.00

Month of start of first business (wave 1, 2 

only) 5.66 11.28 n/a

Year of start of first business (wave 1, 2 

only) 0.64 1.10 n/a

Date of start of first business (wave 3 only) n/a n/a 9.83

Month of start of 2nd business (wave 1, 2 

only) 8.33 16.37 n/a

Year of start of 2nd business (wave 1, 2 

only) 1.38 3.00 n/a

Date of start of second business (wave 3 

only) n/a n/a 7.80

Monthly receipts/sales for first business 17.27 18.80 12.91

Monthly expenses for first business 15.84 16.44 13.16

Hours per week worked at first business 2.51 2.65 2.00

Hours per week worked at 2nd business 4.86 10.18 3.55

Percent of household income from first 

business 2.62 6.71 5.25
Evaluation of Project GATE Appendix B-183 December 2009

Levels of Item Nonresponse Among Eligible 

Cases (in %)

Description Wave 1 

Survey

Wave 2 

Survey

Wave 3 

Survey

Percent of household income from 2nd 

business 4.96 7.19 9.93

Salary to self from first business 1.07 1.62 0.83

Salary to self from 2nd business 0.71 1.80 2.13

Weekly earnings from first business 21.45 27.30 15.28

Weekly earnings from 2nd business 30.00 17.86 15.79

Other income payments from first business 2.22 2.28 1.08

Other income payments from 2nd business 0.71 2.40 2.13

Amount other income payments, first 

business 27.40 31.57 17.43

Amount other income payments, 2nd 

business 21.88 25.00 19.23

Spouse/relative gets regular salary from first 

business 0.43 1.18 0.42

Spouse/relative gets regular salary from 2nd 

business 0.71 1.80 2.13

Weekly regular salary earnings received by 

spouse/relative from first business 18.33 25.00 14.29

Weekly regular salary earnings received by 

spouse/relative from 2nd business 25.00 25.00 33.33

Spouse/relative gets other income payments 

from first business 0.71 1.18

0.42

Spouse/relative gets other income payments 

from 2nd business 0.71 1.80 2.84

Weekly other income earnings received by 

spouse/relative from first business 33.33 35.00 20.45

Weekly other income earnings received by 

spouse/relative from 2nd business 33.33 28.57 50.00

Invested own money in business since RA 0.71 0.96 0.33

Amount of own money invested in business 10.85 15.76 11.52

Borrowed money for business since RA 0.71 0.74 0.50

Amount of money borrowed for business 7.62 9.40 8.91

Currently working for someone else 0.00 0.00 0.00

Had a job that lasted at least 2 weeks since 

RA 0.06 0.15 0.20
Evaluation of Project GATE Appendix B-184 December 2009

Levels of Item Nonresponse Among Eligible 

Cases (in %)

Description Wave 1 

Survey

Wave 2 

Survey

Wave 3 

Survey

Gave employer name, first job lasting 2 wks 

+

2.85 4.15 1.25

Gave employer name, second job lasting 2 

wks+ 4.50 6.05 0.00

Month of start of first job (wave 1, 2 only) 6.81 9.31 n/a

Year of start of first job (wave 1, 2 only) 4.90 6.56 n/a

Date of start of first job (wave 3 only) n/a n/a 4.67

Month of start of 2nd job (wave 1, 2 only) 5.88 9.74 n/a

Year of start of 2nd job (wave 1, 2 only) 4.08 5.98 n/a

Date of start of 2nd job (wave 3 only) n/a n/a 7.63

Month of stop of first job (wave 1, 2 only) 4.77 6.46 n/a

Year of stop of first job (wave 1, 2 only) 4.59 6.13 n/a

Date of stop of first job (wave 3 only) n/a n/a 5.62

Month of stop of 2nd job (wave 1, 2 only) 4.41 6.49 n/a

Year of stop of 2nd job (wave 1, 2 only) 3.92 5.98 n/a

Date of stop of end job (wave 3 only) n/a n/a 6.59

Hours worked per week at first job 5.36 7.04 1.14

Hours worked per week at 2nd job 6.70 9.74 3.61

Weekly regular salary earnings from first job 11.27 13.98 18.05

Weekly regular salary earnings from 2nd job 12.90 14.53 17.50

Total household income past 12 months 9.80 13.52 17.49

Household member received unemployment 

assistance 1.83 1.48 1.23

Respondent indicates still receiving 

unemployment compensation or will provide 

the amount of time he/she received 

unemployment in either weeks or months

7.03 17.96 n/a

Number of weeks or months received 

unemployment compensation, if not still 

receiving it

7.02 17.30 8.09

Respondent answers amount of 

unemployment compensation in weeks (1) or 

months (2)

9.65 19.89 17.75
Evaluation of Project GATE Appendix B-185 December 2009

Levels of Item Nonresponse Among Eligible 

Cases (in %)

Description Wave 1 

Survey

Wave 2 

Survey

Wave 3 

Survey

Amount of unemployment compensation 9.65 19.89 17.75

Received income from Social Security 1.36 1.09 1.14

Number of months received Social Security 4.11 4.44 7.21

Amount of money received from Social 

Security 23.08 19.77 18.94

Received income from food stamps 1.01 1.05 0.98

Number of months received food stamps 4.58 9.60 4.90

Amount of money received from food 

stamps 7.50 7.63 9.15

Received income from pensions 1.59 1.51 1.47

Number of months received pensions 4.26 11.22 12.56

Amount of money received from pensions 17.58 23.96 24.89

Received income from welfare 1.54 1.22 1.47

Number of months received welfare 5.26 5.36 4.35

Amount of money received from welfare 9.88 3.88 12.23

Received income from veterans’ benefits 1.04 1.05 0.94

Number of months received veterans’ 

benefits 3.08 7.82 12.24

Amount of money received from veterans’ 

benefits 20.00 20.32 26.53

Attended any classes, workshops, or 

seminars on topics related to your business 

since RA

0.12

2

0.59 0.04

Number of individual sessions of these 

classes, workshops, or seminars attended. 1.05 4.10 1.04

Length of individual sessions, workshops, or 

seminars, on average 0.00 0.10 1.39

Received any one-on-one counseling or 

technical assistance on starting or expanding 

your business since RA

0.06 0.30 0.00

Number of counseling or technical assistance 

sessions attended 0.96 6.40 0.40

Length of counseling/technical assistance 

sessions, on average 0.96 7.02 0.00

Attended peer support group for selfemployed persons or persons interested in 0.06 0.10 0.00
Evaluation of Project GATE Appendix B-186 December 2009

Levels of Item Nonresponse Among Eligible 

Cases (in %)

Description Wave 1 

Survey

Wave 2 

Survey

Wave 3 

Survey

self-employment since RA

Number of support group sessions attended 1.53 8.08 0.00

Length of support group sessions, on average 2.63 8.75 0.00

Worked with an experienced business-owner 

or someone else who could act as your 

mentor since RA

0.14 0.30 0.04

Number of meetings with mentor 8.02 18.01 3.19

Length of sessions with mentor 5.02 16.54 1.24

Received any other types of self-employment 

services since RA 0.20 0.20 0.04

Constructed variable: B3=1 or B6=1 or B9=1 

or B12=1 or B15=1 0.17 0.53 0.53

Amount paid in total for self-employment 

services 0.76 1.81 2.00

In the survey instrument, some questions are “feeder” questions. These are questions which are 

branching points for the respondent’s pathway through the survey instrument, where the 

response to the question determines which question is asked next. For example, one question 

asks whether the respondent has been self-employed at any time since the previous interview (or 

since random assignment, in the case of the Wave 1 survey). If the respondent answers “yes”, 

then additional questions about the businesses which the respondent owned are asked. However, 

if the respondent answers “no”, then no such additional questions about businesses owned are 

asked.

In some cases, a response was missing to a feeder question. In these situations, we imputed a 

response, as appropriate, depending on the nature of the question.

We imputed the missing values using a hot-deck procedure. We chose this approach because it 

enables imputation of values given a set of constraints. These constraints would be difficult to 

implement using other imputation approaches, such as a model-based or mean-imputation 

procedure (Little and Rubin 2002). 
Evaluation of Project GATE Appendix B-187 December 2009

The hot-deck procedure randomly selects a “donor” with the same values on a set of classing 

variables for each respondent with a missing value (the “recipient”). The donor’s observed value 

on the variable of interest is then used to replace the missing value for the recipient. A 

sequential (with-replacement) nearest-neighbor hot-deck procedure was used, implemented using 

a SAS macro described in Carlson et al. (1995). The number of recipients per donor was 

generally limited to two; in a few cases there were three recipients per donor if the pool of 

donors eligible for the match was small. 

Classing variables were selected that were highly correlated with the variable requiring 

imputation. They were always categorical; continuous variables were converted to categorical 

variables before they could be used as classing variables. Each level of the classing variables is 

referred to as an “imputation class.” When an imputation class had a recipient but no potential 

donors, we collapsed levels of the classing variables so that a donor could be made available to 

the recipient. 

Within each imputation class, donors and recipients had to have similar values for “sorting” 

variables. Sorting variables could either be variables that were less closely related to the variable 

(such as age) requiring imputation than the classing variables, or they could be the continuous 

form of variables that were used as classing variables. 

Research group was the most basic classing variable that used. To ensure no contamination 

occurred across research groups, donors and recipients were nearly always both in the program 

group or both in the control group. The preserve the integrity of the data, we choose classing and 

sorting variables that reflect the most fundamental characteristics of the sample. The classing 

variables include research group, sex and site, and the sorting variable includes age. The 

variables were ordered in terms of the relationship to the variable requiring imputation. 

Variables chosen as classing variables, but lower in this order, were the first to be collapsed 

when it was necessary to collapse imputation classes. Research group was always the first 

variable in this hierarchy, and was collapsed only once across all variables, for both surveys.
Evaluation of Project GATE Appendix B-188 December 2009

We implemented a series of checks to ensure that the imputations were reasonable. These 

checks involved examining the individual imputations as well as examining their relationship to 

other variables. They included:

 Comparing the distribution of (1) raw data, excluding ineligible and missing cases; (2) 

imputed data only, excluding ineligible and noninputed data; and (3) imputed and raw 

data, excluding only ineligible cases. Any unusual differences in these distributions had 

to be explainable. 

 Comparing variables (both imputed and raw) with preexisting nonmissing data to ensure 

no inconsistencies were apparent.

Variance estimates obtained using imputed data will be underestimates of the true variance. As 

the findings with and without the imputations are similar (see Appendix D) and the methods 

necessary to correct the variance estimates are complex and time-consuming, we did not adjust 

the standard errors. Readers should bear this in mind when examining estimates based on 

imputed values that differ from those based on nonimputed values.
Evaluation of Project GATE Appendix C-189 December 2009

APPENDIX C.

ESTIMATION OF IMPACTS AND STANDARD ERRORS

This appendix describes how we estimated the impacts of Project GATE. Because GATE 

applicants were randomly assigned to the program and control groups, a simple difference in the 

mean outcome measures for individuals in the two groups provides an unbiased estimate of the 

impact of Project GATE. However, estimating impacts using a regression model increases 

statistical precision and can adjust for chance differences in the baseline characteristics of 

applicants assigned to the program and control groups. (Appendix D presents results from a 

sensitivity analysis that estimates impacts using differences-in-means rather a regression model). 

The model used is described in detail below. 

C.1 Regression Model for Estimating Overall Impacts of Project Gate

Our estimates of the impacts of Project GATE are based on a comparison of applicants randomly 

assigned to the program group with applicants randomly assigned to the control group. To 

compute impacts, we estimated a statistical model that predicts the outcome of interest as a 

function of program/control status, site, and a set of background characteristics detailed below. 

The basic form of the model is: 

(C.1) 

where

yi

S

is the outcome of interest

i

P

equals 1 if applicant i was in site S and 0 if not

i

X

equals 1 if applicant i was in the program group, 0 if the applicant was in the 

control group

i

5 5

1 1

, i S i S ii i i

S S

y = S + SP + λ β δ ε X = =

∑ ∑ + ′

is a vector of baseline characteristics of individual i
Evaluation of Project GATE Appendix C-190 December 2009

εi

λ, β, and δ are parameters (or vectors of parameters) to be estimated. 

is a random, mean-zero error term that captures the impacts of unobserved 

factors that influence the outcome 

The regression models were estimated using weights to account for survey nonresponse business 

partnerships that were necessarily excluded (Appendix B).

C.1.1 Estimation of Impacts

The parameters of greatest interest are the βS for each site, because they represent the impact on 

applicants of being assigned to the program group rather than the control group in site S. To 

obtain the average impact across all sites, we computed a weighted average βPool of the impacts 

in each site, where the weight is denoted by WS

5

1

Pool S S

S

β β W

=

= ∑

:

The site weight, WS, used in the above formula is the proportion of all respondents that are from 

site S. As a sensitivity check, Appendix D compares the results from our main specification to 

an alternative where the five sites are each given equal weight in the regression, that is, WS

C.1.2 Choice of Linear Regression

= 1/5. 

For all outcomes we estimated the parameters in Equation C.1 using ordinary least squares, 

which models the outcome as a linear function of the predictors. An alternative would have been 

to use logistic regression (or probit models) for binary outcomes such as employment status. 

Logistic regression models the “log odds of success” as a linear function of the predictors: 

( ) log( ) 1

i

i i i

i

g X e π π β

π

= = + − , where ( ) π i i = E y . 

We chose to use linear regression rather than a logistic regression for all outcomes for a few 

reasons. The first reason was simplicity, both of analysis and presentation. There is not a 

standard way of estimating or presenting standard error estimates for pooled impacts estimated
Evaluation of Project GATE Appendix C-191 December 2009

using logistic regression, whereas the calculation and presentation is very straightforward using 

linear regression. 

Second, in previous research conducted by two of the authors of this study (McConnell et al. 

2006), a series of sensitivity analyses indicated that the linear and logistic regressions led to very 

similar results for this analysis. In particular, results from linear regression were compared with 

a bootstrap approach for estimating standard errors in logistic regression. The bootstrap 

approach yields correct standard errors, but is computationally intensive and was not feasible for 

this study because of its very large number of outcome measures. They generated impact 

estimates for a set of key binary outcomes (with a range of mean values, from 0.1 to 0.9) using 

both approaches and compared the results. The bootstrap and linear regression led to remarkably 

similar results; the impact estimates were generally identical and the standard errors (and 

associated p-values) were very similar as well. There were very few instances where the 

methods would lead to different conclusions regarding the significance of an estimated impact. 

We thus chose to use linear regression for all outcomes, as was done in several other large-scale 

evaluations, including Kling (2006), McConnell et al. (2006), and Trenholm et al. (2007). 

C.1.3 Regression Predictors

The predictors included in the regression model (the X variables in Equation C.1) were: age, sex, 

race/ethnicity, whether disabled, marital status, household size, education level, born in the 

United States, whether receiving UI benefits at application, weeks of UI benefits received over 

the previous year, employment at the time of random assignment, prior self-employment 

experience (either oneself or a relative), prior managerial experience, family support for pursuing 

self-employment, another family member employed, household income, credit problems, 

relevant skills developed in a job or hobby, and outside health insurance coverage. Data to 

define these predictors were obtained from the GATE application package. 
Evaluation of Project GATE Appendix C-192 December 2009

C.2 Calculation of Standard Errors

To determine whether impact estimates were statistically significant, we computed standard 

errors that account for the nonresponse weights (described in Appendix B) and the correlation of 

the outcomes of business partners. Models were estimated in Stata 10.1, incorporating weights 

as probability weights and clustering standard errors by business partnerships. For outcomes 

based on the full sample—such as from the UI wage records—we used the same procedures, but 

the weights were not adjusted for survey nonresponse because the full sample was included in 

the analysis.
Evaluation of Project GATE Appendix D-193 December 2009

APPENDIX D.

SENSITIVITY ANALYSES

To assess the sensitivity of our impact estimates to different estimation procedures or 

assumptions, we conducted a series of sensitivity analyses. This appendix describes these 

analyses and presents a summary of the results. The sensitivity analyses included:

 Estimating impacts with sites weighted equally

 Including all business partners in the analysis

 Excluding imputed outcome values from the analysis

 Conducting an unweighted analysis

 Estimating impacts without using regression adjustment

We examined the impact estimates for the key outcome measures under each of these five 

alternative specifications and compared the results to the benchmark results presented in the 

text. As reported in Table D.1, the results are fairly robust across all specifications. The 

following sections describe the alternative specification in more detail.

D.1 Weighting Sites Equally

The first sensitivity analysis we conducted was to weight sites equally in computing the overall 

impacts, rather than weighting by the number of GATE applicants in each site. The 

Minneapolis/St. Paul and Philadelphia sites are large, while Northeast Minnesota has only a 

small fraction of the sample; consequently, the site weights change substantially depending on 

whether sites are equally or unequally weighted (see Table D.2).
Evaluation of Project GATE Appendix D-194 December 2009

Table D.1: Impacts on Key Outcomes Under Different Specifications

Outcome

Benchmark 

Results

(1)

Sites 

Weighted 

Equally

(2)

All 

Business 

Partners

(3)

No 

Imputations

(4)

No 

Sample 

Weights

(5)

No 

Regression 

Adjustment

(6)

Received any Services 14% *** 13% *** 14 *** 14%*** 14% *** 14% ***

Attended Classes 18 *** 19 *** 18 *** 18 *** 19 *** 17 ***

Attended Counseling 29 *** 28 *** 28 *** 29 *** 30 *** 27 ***

Owned a Business

Quarter 1 3 * 4 * 3 * 3 * 3 ** 2 

Quarter 2 5 *** 5 ** 5 *** 5 *** 6 *** 4 ***

Quarter 3 5 *** 5 ** 5 *** 5 *** 6 *** 5 ***

Quarter 4 3 * 3 3 * 3 * 4 ** 2

Quarter 5 3 4 3 * 3 3 * 2

Quarter 6 3 3 3 3 3 1

Quarter 7 3 2 3 3 3 * 3

Quarter 8 3 2 3 * 3 4 ** 3 *

Quarter 9 3 1 3 3 3 * 2

Quarter 10 2 2 3 2 3 3

Quarter 11 3 2 3 3 3 3

Quarter 12 2 1 2 2 2 2

Quarter 13 2 2 2 2 2 1

Quarter 14 2 2 2 2 2 1

Quarter 15 2 2 2 2 2 2

Quarter 16 2 2 2 2 2 1

Any quarter 1-16 2 * 2 2 2 * 2 2

Employed in Wage and Salary Job

Quarter 16 -4% ** -5%* -4% * -4% ** -4% * -4% *

Any quarter 1-16 -2 -2 -1 -2 -2 -2

Employed for Self or Someone Else

Quarter 16 -1% -1% -1% -1% -1% -1%

Any quarter 1-16 0 0 0 0 0 0

Earnings from Businesses 

in Q1-Q16 $962 $2,612 $728 $466 $142 $1,112

Earnings from Jobs in Q1-

Q16 -1,532 -626 -552 19 -326 -983

Earnings from Businesses 

or Jobs in Q1-Q16 -570 1,985 176 741 -184 129

Source: Follow-up surveys, waves 1, 2 and 3.

Notes: See Appendix C for a discussion of the regression model used for the main results. Each column of this 

table uses the same specification as the main results, changing only the aspect labeling each column. The 

exception is column (3), which includes all business partners but does not include sample weights.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE Appendix D-195 December 2009

Table D.2: Site Weights Under Alternative Specifications (updated)

Sites Weighted by Size

(Main Analysis)

Sites Weighted Equally

(Sensitivity Analysis)

Philadelphia 23% 20%

Pittsburgh 14 20

Minneapolis/ St. Paul 43 20

Northeast Minnesota 5 20

Maine 15 20

Total 100 100

In spite of the potential differences introduced by these weighting schemes, the impact estimates 

are very similar with either weighting scheme (see Table D.1, Column 2). Some of the estimates 

become less statistically significant, however, which arises largely because of the small sample 

in Northeast Minnesota, because imprecise impact estimates for that site have disproportionately 

large effects on the precision of the pooled impact estimate.

D.2 Including All Business Partners

As described in Chapter II, some people applied for Project GATE at the same time as a partner 

in the same business. If one partner was assigned to the program group while the other was 

assigned to the control group, the impact estimates could be susceptible to contamination. For 

this reason, the benchmark specification excludes partnerships that are split between the program 

and control group and reweights the remaining partnerships appropriately. However, the impact 

estimates are very similar when these potentially contaminated partnerships are included (see 

Table D.1, Column 3).

D.3 Excluding Imputed Values

As described in Appendix B, values of some outcomes are imputed. The variables most affected 

by the imputations are the earnings from businesses and wage and salary jobs. Column 4 of 

Table D.1 shows the estimates of earnings impacts when sample members with missing 
Evaluation of Project GATE Appendix D-196 December 2009

information on these outcomes are dropped from the sample. As expected, without the 

imputations, the levels and impact estimates of earnings are smaller. The impact on earnings 

from wage and salary jobs over the whole follow-up period is -$326 when observations with 

missing earnings data are dropped, compared with -$1,532 when earnings are imputed when the

data are missing. This is because when an observation is dropped, it is equivalent to assuming 

that the sample member will effectively be assigned the average value of the outcome. Yet 

because we know the sample member does have a job/business, while the average is taken over 

sample members who may or may not have a job/business, the average value is likely to be an 

underestimate of their earnings from the job or business. This is especially an issue for the 

control group because a higher proportion of the control group was employed, especially in the 

first quarters of the follow-up period.

D.4 Unweighted Analyses

For all outcomes constructed using the survey data, the main impacts presented in the text are 

estimated using weights that adjust for survey nonresponse as described in Appendix B. To 

assess the effect of this weighting, we also estimated impacts for the survey-based outcomes 

without any weights. Those results are presented for key outcomes in Column 5 of Table D.1. 

Again, the results are very similar to the benchmark specification.

D.5 Difference-in-Means Analyses

Lastly, we estimated impacts without any covariates in the regression models. This is equivalent 

to calculating simple differences-in-means of the outcomes between the approaches, with no 

adjustments for covariates. The results from this analysis are presented for key outcomes in 

Column 6 of Table D.1. The results again are very similar to those in the main analyses, 

indicating that the regression adjustment did not dramatically affect the estimates. The primary 

exception is for business ownership in quarters 1 after random assignment; it is precisely 

estimated under the benchmark specification, but less so without regression adjustment, as would 

be expected.
Evaluation of Project GATE Appendix E-197 December 2009

APPENDIX E.

Tables for Figures

Table E.1: Table For Figure V.2: Business Ownership by Quarter

Outcome

Program 

Group 

Mean

Control 

Group Mean

Impact on All 

Eligible 

Applicants

Random Assignment 20 21 -1

Quarter 1 37 34 3 *

Quarter 2 42 37 5 ***

Quarter 3 42 37 5 ***

Quarter 4 42 38 3 *

Quarter 5 44 41 3

Quarter 6 46 43 3

Quarter 7 30 27 3

Quarter 8 34 31 3

Quarter 9 35 33 3

Quarter 10 36 34 2

Quarter 11 38 35 3

Quarter 12 37 36 2

Quarter 13 38 36 2

Quarter 14 38 36 2

Quarter 15 38 36 2

Quarter 16 38 36 2
Evaluation of Project GATE Appendix E-198 December 2009

Table E.2: Table for Figure V.4: Impacts on Business Ownership For Those Receiving and 

Those Not Receiving UI Benefits at Random Assignment

Owned a Business in Quarter After 

Random Assignment UI No UI

Quarter 1 3.4 2.9

Quarter 2 8.7 2.7

Quarter 3 8.9 2.7

Quarter 4 5.7 2.5

Quarter 5 6.3 1.6

Quarter 6 5.1 2.1

Quarter 7 3.1 2.4

Quarter 8 5.1 1.6

Quarter 9 3.6 2.1

Quarter 10 2.6 2.9

Quarter 11 2.8 3.4

Quarter 12 1.5 2.1

Quarter 13 1.3 2.5

Quarter 14 3 1.8

Quarter 15 3 1.2

Quarter 16 2.3 1.4
Evaluation of Project GATE Appendix E-199 December 2009

Table E.3: Table for Figure V.10: Impacts on Earnings

Outcome Program 

Group Mean

Control 

Group Mean

Impact on All 

Eligible 

Applicants

Earnings from Business in 

Quarters After Random 

Assignment

Quarter 1 $345 $419 -$74

Quarter 2 471 533 -62

Quarter 3 555 524 31

Quarter 4 655 607 47

Quarter 5 662 619 43

Quarter 6 649 622 27

Quarter 7 655 654 1

Quarter 8 689 599 90

Quarter 9 706 611 95

Quarter 10 721 626 95

Quarter 11 751 657 94

Quarter 12 791 675 116

Quarter 13 815 679 136

Quarter 14 811 685 126

Quarter 15 808 696 111

Quarter 16 786 700 86
Evaluation of Project GATE Appendix E-200 December 2009

Table E.4: Table for Figure VI.1: Self-Employment Rate by Quarter (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Owned a Business at:

Random Assignment 20 21 -1

Quarter 1 37 34 3 *

Quarter 2 42 37 5 ***

Quarter 3 42 37 5 ***

Quarter 4 42 38 3 *

Quarter 5 44 41 3

Quarter 6 46 43 3

Quarter 7 30 27 3

Quarter 8 34 31 3

Quarter 9 35 33 3

Quarter 10 36 34 2

Quarter 11 38 35 3

Quarter 12 37 36 2

Quarter 13 38 36 2

Quarter 14 38 36 2

Quarter 15 38 36 2

Quarter 16 38 36 2
Evaluation of Project GATE Appendix E-201 December 2009

Table E.5: Table for Figure VI.2: Self-Employment Rate (UI Recipients at Random 

Assignment)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Owned a Business at:

Quarter 1 38 34 3

Quarter 2 46 38 9 ***

Quarter 3 46 37 9 ***

Quarter 4 45 39 6 *

Quarter 5 48 42 6 **

Quarter 6 48 43 5 *

Quarter 7 32 29 3

Quarter 8 36 31 5 *

Quarter 9 37 33 4

Quarter 10 37 34 3

Quarter 11 38 35 3

Quarter 12 38 36 2

Quarter 13 38 37 1

Quarter 14 39 36 3

Quarter 15 39 36 3

Quarter 16 38 36 2
Evaluation of Project GATE Appendix E-202 December 2009

Table E.6: Table for Figure VI.3: Wage and Salary Employment Rate (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Worked for Someone Else at:

Quarter 1 44 47 -3 *

Quarter 2 53 56 -4 *

Quarter 3 59 62 -3

Quarter 4 55 57 -2

Quarter 5 55 59 -4 **

Quarter 6 60 64 -4 *

Quarter 7 55 56 -1

Quarter 8 51 52 -1

Quarter 9 51 55 -4 *

Quarter 10 53 56 -3

Quarter 11 55 56 -1

Quarter 12 55 58 -2

Quarter 13 56 60 -4 *

Quarter 14 56 61 -4 **

Quarter 15 57 61 -4 **

Quarter 16 58 62 -4 **
Evaluation of Project GATE Appendix E-203 December 2009

Table E.7: Table for Figure VI.4: Employment in Wage and Salary Jobs (UI Recipient at 

Random Assignment)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 32 41 -9 ***

Quarter 2 48 56 -8 **

Quarter 3 58 64 -6 *

Quarter 4 53 63 -10 ***

Quarter 5 56 64 -9 ***

Quarter 6 64 68 -4

Quarter 7 58 58 0

Quarter 8 54 55 -1

Quarter 9 54 57 -4

Quarter 10 56 58 -3

Quarter 11 59 59 0

Quarter 12 59 60 -1

Quarter 13 60 64 -5

Quarter 14 61 64 -3

Quarter 15 61 65 -4

Quarter 16 62 65 -3
Evaluation of Project GATE Appendix E-204 December 2009

Table E.8: Table for Figure VI.5: Overall Employment Rate (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Worked for Self or Someone 

Else:

Quarter 1 72% 70% 2

Quarter 2 80 80 0

Quarter 3 87 85 1

Quarter 4 83 81 2

Quarter 5 84 83 1

Quarter 6 88 87 1

Quarter 7 80 77 3

Quarter 8 76 74 2

Quarter 9 76 76 0

Quarter 10 77 77 0

Quarter 11 79 78 1

Quarter 12 79 79 0

Quarter 13 79 80 -1

Quarter 14 80 81 -2

Quarter 15 80 82 -2

Quarter 16 80 82 -1
Evaluation of Project GATE Appendix E-205 December 2009

Table E.9: Table for Figure VI.6: Overall Employment Rate (UI Recipients at Random 

Assignment)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 64 66 -2

Quarter 2 80 81 -1

Quarter 3 89 88 2

Quarter 4 84 86 -2

Quarter 5 86 87 -1

Quarter 6 91 90 1

Quarter 7 85 80 5 *

Quarter 8 80 75 4

Quarter 9 79 78 1

Quarter 10 80 80 0

Quarter 11 82 81 1

Quarter 12 82 82 1

Quarter 13 82 85 -2

Quarter 14 83 85 -2

Quarter 15 83 85 -2

Quarter 16 83 85 -1
Evaluation of Project GATE Appendix E-206 December 2009

Table E.10: Table for Figure VI.7: Self-Employment Hours (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 158 146 12

Quarter 2 200 174 26 **

Quarter 3 198 175 23 **

Quarter 4 206 174 32 ***

Quarter 5 219 179 40 ***

Quarter 6 219 184 35 ***

Quarter 7 185 167 19

Quarter 8 178 162 16

Quarter 9 179 162 17

Quarter 10 178 164 15

Quarter 11 180 166 13

Quarter 12 178 170 8

Quarter 13 179 171 7

Quarter 14 177 171 6

Quarter 15 175 171 4

Quarter 16 170 166 3
Evaluation of Project GATE Appendix E-207 December 2009

Table E.11: Table for Figure VI.8: Wage and Salary Employment Hours (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 162 183 -21 **

Quarter 2 210 239 -28 ***

Quarter 3 228 247 -19 *

Quarter 4 238 254 -16

Quarter 5 251 275 -24 **

Quarter 6 256 284 -27 **

Quarter 7 236 255 -19

Quarter 8 240 252 -12

Quarter 9 247 266 -19

Quarter 10 257 276 -20 *

Quarter 11 266 280 -14

Quarter 12 276 290 -15

Quarter 13 274 301 -28 **

Quarter 14 277 304 -27 **

Quarter 15 281 306 -25 **

Quarter 16 277 301 -24 **
Evaluation of Project GATE Appendix E-208 December 2009

Table E.12: Table for Figure VI.9: Total Employment Hours (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 318 329 -11

Quarter 2 410 414 -4

Quarter 3 426 424 2

Quarter 4 444 431 14

Quarter 5 470 456 14

Quarter 6 475 468 7

Quarter 7 422 422 -1

Quarter 8 419 415 4

Quarter 9 427 430 -3

Quarter 10 436 442 -6

Quarter 11 447 448 -1

Quarter 12 454 462 -7

Quarter 13 453 474 -21

Quarter 14 455 477 -22

Quarter 15 457 479 -22

Quarter 16 447 469 -21
Evaluation of Project GATE Appendix E-209 December 2009

Table E.13: Table for Figure VI.10: Regular Self-Employment Salary Earnings (Full 

Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Earnings from Businesses: 

Quarter 1 $345 $419 -$74

Quarter 2 470 533 -$62

Quarter 3 555 524 $31 

Quarter 4 655 607 $47 

Quarter 5 662 619 $43 

Quarter 6 650 622 $27 

Quarter 7 655 654 $1 

Quarter 8 689 599 $90 

Quarter 9 706 611 $95 

Quarter 10 721 626 $95 

Quarter 11 751 657 $94 

Quarter 12 791 675 $116 

Quarter 13 815 679 $136 

Quarter 14 811 685 $126 

Quarter 15 808 696 $111 

Quarter 16 786 700 $85 
Evaluation of Project GATE Appendix E-210 December 2009

Table E.14: Table for Figure VI.11: Regular Self-Employment Salary Earnings (UI 

Recipients at RA)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 $288 $419 -$131

Quarter 2 447 555 -$108

Quarter 3 525 567 -$42

Quarter 4 681 655 $26

Quarter 5 748 657 $91

Quarter 6 777 649 $128

Quarter 7 977 684 $293

Quarter 8 1,012 684 $328

Quarter 9 1,027 704 $324

Quarter 10 1,050 696 $354

Quarter 11 1,050 754 $296

Quarter 12 1,078 766 $312

Quarter 13 1,096 762 $333

Quarter 14 1,095 776 $319

Quarter 15 1,096 789 $307

Quarter 16 1,042 784 $258
Evaluation of Project GATE Appendix E-211 December 2009

Table E.15: Table for Figure VI.12: Wage and Salary Earnings (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Earnings from Wage and Salary 

Jobs:

Quarter 1 2,639 2,981 -$343 *

Quarter 2 3,566 3,962 -$395 *

Quarter 3 3,956 4,226 -$270

Quarter 4 4,264 4,487 -$224

Quarter 5 4,547 4,887 -$339

Quarter 6 4,731 5,177 -$447 *

Quarter 7 4,618 4,848 -$230

Quarter 8 4,905 4,867 $38

Quarter 9 5,144 5,118 $27

Quarter 10 5,369 5,301 $68

Quarter 11 5,593 5,379 $214

Quarter 12 5,764 5,560 $203

Quarter 13 5,734 5,742 -$8

Quarter 14 5,827 5,785 $43

Quarter 15 5,914 5,848 $66

Quarter 16 5,871 5,806 $65
Evaluation of Project GATE Appendix E-212 December 2009

Table E.16: Table for Figure VI.13: Wage and Salary Earnings (UI Recipients at RA)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 $1,545 $2,189 -$644 **

Quarter 2 3,141 3,773 -632 *

Quarter 3 4,056 4,320 -264

Quarter 4 4,502 4,805 -302

Quarter 5 4,944 5,298 -354

Quarter 6 5,294 5,643 -349

Quarter 7 5,229 5,093 137

Quarter 8 5,491 5,289 202

Quarter 9 5,789 5,574 215

Quarter 10 6,125 5,853 272

Quarter 11 6,319 5,945 374

Quarter 12 6,517 6,126 391

Quarter 13 6,408 6,491 -83

Quarter 14 6,514 6,564 -50

Quarter 15 6,492 6,446 46

Quarter 16 6,435 6,501 -66
Evaluation of Project GATE Appendix E-213 December 2009

Table E.17: Table for Figure VI.14: Total Earnings (Full Sample)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Total Earnings from All Jobs 

and Businesses:

Quarter 1 $2,984 $3,401 -$417 **

Quarter 2 4,038 4,494 -458 **

Quarter 3 4,511 4,750 -238

Quarter 4 4,918 5,095 -176

Quarter 5 5,210 5,506 -296

Quarter 6 5,380 5,799 -420

Quarter 7 5,273 5,502 -230

Quarter 8 5,594 5,465 128 

Quarter 9 5,850 5,729 122 

Quarter 10 6,090 5,927 163 

Quarter 11 6,344 6,036 308 

Quarter 12 6,555 6,236 319 

Quarter 13 6,550 6,421 129 

Quarter 14 6,638 6,470 169 

Quarter 15 6,722 6,545 177 

Quarter 16 6,656 6,506 151 
Evaluation of Project GATE Appendix E-214 December 2009

Table E.18: Table for Figure VI.15: Total Earnings (UI Recipients at Random 

Assignment)

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All

Eligible 

Applicants

Quarter 1 $1,834 $2,609 -$775 ***

Quarter 2 3,588 4,328 -740 **

Quarter 3 4,581 4,887 -306

Quarter 4 5,184 5,460 -276

Quarter 5 5,692 5,955 -263

Quarter 6 6,072 6,293 -221

Quarter 7 6,206 5,777 429

Quarter 8 6,502 5,973 530

Quarter 9 6,816 6,278 539

Quarter 10 7,175 6,549 626

Quarter 11 7,369 6,699 671

Quarter 12 7,596 6,892 703

Quarter 13 7,504 7,253 251

Quarter 14 7,609 7,340 269

Quarter 15 7,588 7,234 353

Quarter 16 7,477 7,285 192
Evaluation of Project GATE Appendix E-215 December 2009

Table E.19: Table for Figure VI.17: Wage and Salary Earnings – Age Less than 40 at 

Random Assignment

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 $3,310 $3,917 -$607 *

Quarter 2 4,235 4,920 -685 *

Quarter 3 4,368 5,087 -719 *

Quarter 4 4,581 5,492 -911 *

Quarter 5 4,695 5,770 -1,074 **

Quarter 6 4,677 5,902 -1,225 ***

Quarter 7 4,060 5,232 -1,172 ***

Quarter 8 4,222 4,998 -777 *

Quarter 9 4,419 5,057 -639

Quarter 10 4,652 5,218 -566

Quarter 11 4,893 5,164 -271

Quarter 12 5,032 5,255 -223

Quarter 13 5,118 5,454 -336

Quarter 14 5,314 5,637 -323

Quarter 15 5,448 5,739 -292

Quarter 16 5,503 5,688 -185
Evaluation of Project GATE Appendix E-216 December 2009

Table E.20: Table for Figure VI.18: Wage and Salary Earnings – Education No Greater 

than 12th Grade

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 $2,416 $2,869 -$453 *

Quarter 2 3,148 3,737 -589 **

Quarter 3 3,387 3,726 -338

Quarter 4 3,628 3,977 -349

Quarter 5 3,831 4,313 -482 *

Quarter 6 3,935 4,430 -495 *

Quarter 7 3,734 4,085 -351

Quarter 8 3,848 4,064 -216

Quarter 9 4,083 4,304 -221

Quarter 10 4,288 4,457 -169

Quarter 11 4,530 4,548 -18

Quarter 12 4,678 4,726 -48

Quarter 13 4,597 4,911 -314

Quarter 14 4,683 4,960 -277

Quarter 15 4,741 4,991 -251

Quarter 16 4,659 4,858 -199
Evaluation of Project GATE Appendix E-217 December 2009

Table E.21: Table for Figure VI.19: Self-Employment Earnings – Not Working at 

Random Assignment

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 $269 $243 $26

Quarter 2 421 373 48

Quarter 3 527 392 135

Quarter 4 656 433 224 *

Quarter 5 707 442 265 *

Quarter 6 676 444 232 *

Quarter 7 740 493 246 *

Quarter 8 815 488 327 **

Quarter 9 836 514 321 **

Quarter 10 850 510 340 **

Quarter 11 871 556 315 **

Quarter 12 916 576 339 **

Quarter 13 950 568 383 **

Quarter 14 944 564 380 **

Quarter 15 944 583 362 **

Quarter 16 909 584 325 **
Evaluation of Project GATE Appendix E-218 December 2009

Table E.22: Table for Figure VI.20: Self-Employment Earnings – Non-Whites

Outcome

Program 

Group 

Mean

Control 

Group 

Mean

Impact on All 

Eligible 

Applicants

Quarter 1 202 243 -$41

Quarter 2 239 299 -$60

Quarter 3 299 255 $44

Quarter 4 390 310 $80

Quarter 5 444 320 $124

Quarter 6 471 332 $139

Quarter 7 383 262 $121

Quarter 8 412 184 $228 **

Quarter 9 425 201 $224 **

Quarter 10 456 217 $239 **

Quarter 11 520 257 $263 **

Quarter 12 557 301 $256 **

Quarter 13 591 314 $277 **

Quarter 14 595 317 $278 **

Quarter 15 598 328 $270 **

Quarter 16 591 353 $238 *
Evaluation of Project GATE Appendix F-219 December 2009

APPENDIX F.

Receipt of Public Assistance

A key measure of self-sufficiency is the extent to which participants rely on public assistance. 

The three follow-up surveys asked about the receipt of food stamps, cash welfare (such as 

Temporary Assistance for Needy Families-TANF), Social Security benefits, and veterans’

benefits. Respondents were asked whether they had received benefits and, if so, for how many 

months over the follow-up period, and how much they received on average per month. Table 

F.1 and Table F.2 show impact estimates when these outcome variables are aggregated over all 

three waves of the survey. For example, the proportion of program group members who 

received Food Stamp benefits at any time between random assignment and the Wave 3 survey is 

compared to the proportion of control group members who received Food Stamp benefits at any 

time between random assignment and Wave 3.

F.1 Full Sample

The results in Table F.1 indicate that Project GATE reduced the likelihood of receiving TANF 

by 2 percentage points, from 12 percent to 10 percent. However, GATE had no impact on 

receipt of Food Stamps, Social Security benefits, or Veterans’ benefits. GATE had no impact on 

the months of receipt of any of these benefits (including TANF), or the amounts received.

For the sample as a whole, GATE reduced the likelihood of receiving TANF; GATE 

had no impact on other Public Assistance benefits. [Table F.1]
Evaluation of Project GATE Appendix F-220 December 2009

Table F.1: Impacts on Receipt of Public Assistance

Outcome Program 

Group Mean

Control 

Group Mean

Impact on 

All Eligible 

Applicants

Received Benefit

Food stamp benefits 20% 20% 0

Temporary Assistance for Needy Families 

(TANF) or cash welfare 10 12 -2 *

Social Security Retirement (SSR), Social 

Security Disability (SSD), or Social Security 

Survivors (SSS) benefits

21 24 -2

Veterans’ benefits 3 3 0

Months Received Benefits

Food stamp benefits 3.4 3.4 0.0

TANF or cash welfare 1.7 1.7 -0.1

SSR, SSD, or SSS benefits 5.8 5.9 -0.1

Veterans’ benefits 0.9 0.6 0.3

Amount of Benefits Received

Food stamp benefits $790 $759 $31

TANF or cash welfare 822 946 -124

SSR, SSD, or SSS benefits 6,677 6,501 175

Veterans’ benefits 466 320 146

Number of Respondents 1,274 1,176 2,450

Source: Follow-up surveys, Waves 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.
Evaluation of Project GATE Appendix F-221 December 2009

F.2 UI Recipients

Table F.2: Impacts on Receipt of Public Assistance (UI Recipients)

Outcome Program 

Group Mean

Control 

Group Mean

Impact on 

All Eligible 

Applicants

Received Benefit

Food stamp benefits 15% 15% 0

Temporary Assistance for Needy Families 

(TANF) or cash welfare 7 10 -2

Social Security Retirement (SSR), Social 

Security Disability (SSD), or Social Security 

Survivors (SSS) benefits

19 22 -3

Veterans’ benefits 3 1 2 *

Months Received Benefits

Food stamp benefits 2.3 2.2 0.1

TANF or cash welfare 1.1 1.0 0.1

SSR, SSD, or SSS benefits 4.8 5.4 -0.6

Veterans’ benefits 0.9 0.2 0.7 **

Amount of Benefits Received

Food stamp benefits $559 $529 $29

TANF or cash welfare 685 523 162

SSR, SSD, or SSS benefits 5,939 6,380 -441

Veterans’ benefits 452 39 414 ***

Number of Respondents 545 477 1,022

Source: Follow-up surveys, Waves 1, 2, and 3.

Notes: Reported means and impacts are regression-adjusted to control for differences between the program and 

control group members in baseline characteristics. Estimates were obtained using weights to adjust for 

differences between survey respondents and nonrespondents in baseline characteristics.

*/**/*** Estimate significantly different from zero at the 0.10/0.05/0.01 level.

For the subgroup of UI recipients at random assignment, GATE increased the 

likelihood of receiving Veterans’ benefits, as well as the duration and amount of these 

benefits. [Table F.2]
Evaluation of Project GATE Appendix F-222 December 2009

For the subgroup of sample members who were UI recipients at random assignment, Project 

GATE increased the likelihood of receiving Veterans’ benefits, the number of months that 

Veterans’ benefits were received, and the amount of Veterans’ benefits received.