Ex-Ante Cost–Benefit Evaluation of Active Labor Market Policies for Self-Employment in Spain

Active labor market policies (ALMPs) targeting self-employment have become a well-established and relevant instrument within employment promotion strategies across many European countries. However, despite their strategic and economic importance, there is limited evidence on their potential performance prior to implementation. This paper aims to address this gap by conducting an ex-ante cost–benefit simulation of different types of ALMPs designed to promote self-employment in Spain. The methodology is based on estimating public costs per beneficiary and quantifiable potential benefits, including avoided welfare payments, additional tax revenues, and the generation of economic activity. These benefits are adjusted using two key parameters: additionality (the proportion of the effect genuinely attributable to the policy) and persistence (the duration of the impact over time). In addition, three sensitivity scenarios (conservative, baseline, and favorable) are developed. The results suggest that financing and access to credit policies exhibit the most robust returns, while direct subsidies, general tax incentives, and emergency policies are more sensitive to intervention design features. Consequently, the effectiveness of ALMPs targeting self-employment depends fundamentally on their ability to align with the specific frictions faced by potential entrepreneurs and on the persistence of their effects.