HBS Working Knowledge has an interesting article today, "Food Stamp Entrepreneurs: How Public Assistance Enables Business Bootstrapping". A controlled study shows that people on public assistance opt for self-employment, start new businesses and increase family income from such activities in greater numbers than another group of equally poor people that do not qualify for government assistance.
One's first reaction might be that government assistance has a real economic and social value, as shown by this study. However, a study in Sweden shows that undergraduate students who exit an entrepreneurship program where venture funding is guaranteed for selected businesses are more likely to opt to start new businesses. Do you recognize the similarity between U.S. public assistance and the program in Sweden?
In each case the program reduces the economic risk of cash flow uncertainty sufficiently for the individual to start a new business. Government assistance is not really relevant. Any program that reduces cash flow risk is likely to spawn new business entrepreneurs.