Long-term effects of hiring subsidies for low-educated unemployed youths

Andrea Albanese; Bart Cockx; Muriel Dejemeppe

doi:10.1016/j.jpubeco.2024.105137

Long-term effects of hiring subsidies for low-educated unemployed youths

Andrea Albanese^*, Bart Cockx, Muriel Dejemeppe

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

We use regression discontinuity design and difference-in-differences methods to estimate the impact of a one-time hiring subsidy for low-educated unemployed youths in Belgium during the recovery from the Great Recession. Within a year of unemployment, the subsidy increases job-finding in the private sector by 10 percentage points. Over six years, high school graduates secure 2.8 more quarters of private employment. However, they transition from public jobs and self-employment, resulting in no net increase in overall employment, albeit with better wages. High school dropouts experience no lasting benefits. Additionally, in tight labor markets near Luxembourg's employment hub, the subsidy results in a complete deadweight loss.

Original language	English
Article number	105137
Journal	Journal of Public Economics
Volume	235
DOIs	https://doi.org/10.1016/j.jpubeco.2024.105137
Publication status	Published - 1 Jul 2024

JEL classifications

c21 - "Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions"
j08 - Labor Economics Policies
j23 - Labor Demand
j24 - "Human Capital; Skills; Occupational Choice; Labor Productivity"
j64 - Unemployment: Models, Duration, Incidence, and Job Search
j68 - Mobility, Unemployment, and Vacancies: Public Policy
j61 - "Geographic Labor Mobility; Immigrant Workers"

Keywords

Difference-in-differences
Hiring subsidies
Low-educated
Regression discontinuity design
Spillover effects
Youth unemployment

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10.1016/j.jpubeco.2024.105137

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@article{bb406e7663ac4fa1bd3e9081b9e30cf3,

title = "Long-term effects of hiring subsidies for low-educated unemployed youths",

abstract = "We use regression discontinuity design and difference-in-differences methods to estimate the impact of a one-time hiring subsidy for low-educated unemployed youths in Belgium during the recovery from the Great Recession. Within a year of unemployment, the subsidy increases job-finding in the private sector by 10 percentage points. Over six years, high school graduates secure 2.8 more quarters of private employment. However, they transition from public jobs and self-employment, resulting in no net increase in overall employment, albeit with better wages. High school dropouts experience no lasting benefits. Additionally, in tight labor markets near Luxembourg's employment hub, the subsidy results in a complete deadweight loss.",

keywords = "Difference-in-differences, Hiring subsidies, Low-educated, Regression discontinuity design, Spillover effects, Youth unemployment",

author = "Andrea Albanese and Bart Cockx and Muriel Dejemeppe",

note = "Funding Information: We acknowledge the financial support for this research project from the CORE program of the Luxembourg National Research Fund (FNR) (project number 11700060). This paper uses confidential data from the Crossroads Bank for Social Security (CBSS) (contract no. ART5/18/033). The data can be obtained by filing a request directly with CBSS (https://www.ksz-bcss.fgov.be/en). The authors are willing to assist. We thank Sylvain Klein for the provision of the commuting-time statistics. We are grateful to the editor, David Seim, and three anonymous reviewers for their constructive comments. We also thank Sam Desiere, Felix Stips, Kostantinos Tatsiramos, Bruno Van der Linden, and the participants at the 33rd Annual Conference of the European Association of Labour Economists (EALE), the Counterfactual Methods for Policy Impact Evaluation (COMPIE) Conferences in 2021 and 2022, the seminar at the Competence Centre on Microeconomic Evaluation, Joint Research Center (JRC), and the seminar at LISER for their valuable suggestions. data source: The data that has been used is confidential.",

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month = jul,

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doi = "10.1016/j.jpubeco.2024.105137",

language = "English",

volume = "235",

journal = "Journal of Public Economics",

issn = "0047-2727",

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AU - Albanese, Andrea

AU - Cockx, Bart

AU - Dejemeppe, Muriel

N1 - Funding Information: We acknowledge the financial support for this research project from the CORE program of the Luxembourg National Research Fund (FNR) (project number 11700060). This paper uses confidential data from the Crossroads Bank for Social Security (CBSS) (contract no. ART5/18/033). The data can be obtained by filing a request directly with CBSS (https://www.ksz-bcss.fgov.be/en). The authors are willing to assist. We thank Sylvain Klein for the provision of the commuting-time statistics. We are grateful to the editor, David Seim, and three anonymous reviewers for their constructive comments. We also thank Sam Desiere, Felix Stips, Kostantinos Tatsiramos, Bruno Van der Linden, and the participants at the 33rd Annual Conference of the European Association of Labour Economists (EALE), the Counterfactual Methods for Policy Impact Evaluation (COMPIE) Conferences in 2021 and 2022, the seminar at the Competence Centre on Microeconomic Evaluation, Joint Research Center (JRC), and the seminar at LISER for their valuable suggestions. data source: The data that has been used is confidential.

PY - 2024/7/1

Y1 - 2024/7/1

N2 - We use regression discontinuity design and difference-in-differences methods to estimate the impact of a one-time hiring subsidy for low-educated unemployed youths in Belgium during the recovery from the Great Recession. Within a year of unemployment, the subsidy increases job-finding in the private sector by 10 percentage points. Over six years, high school graduates secure 2.8 more quarters of private employment. However, they transition from public jobs and self-employment, resulting in no net increase in overall employment, albeit with better wages. High school dropouts experience no lasting benefits. Additionally, in tight labor markets near Luxembourg's employment hub, the subsidy results in a complete deadweight loss.

AB - We use regression discontinuity design and difference-in-differences methods to estimate the impact of a one-time hiring subsidy for low-educated unemployed youths in Belgium during the recovery from the Great Recession. Within a year of unemployment, the subsidy increases job-finding in the private sector by 10 percentage points. Over six years, high school graduates secure 2.8 more quarters of private employment. However, they transition from public jobs and self-employment, resulting in no net increase in overall employment, albeit with better wages. High school dropouts experience no lasting benefits. Additionally, in tight labor markets near Luxembourg's employment hub, the subsidy results in a complete deadweight loss.

KW - Difference-in-differences

KW - Hiring subsidies

KW - Low-educated

KW - Regression discontinuity design

KW - Spillover effects

KW - Youth unemployment

U2 - 10.1016/j.jpubeco.2024.105137

DO - 10.1016/j.jpubeco.2024.105137

M3 - Article

SN - 0047-2727

VL - 235

JO - Journal of Public Economics

JF - Journal of Public Economics

M1 - 105137

ER -

Long-term effects of hiring subsidies for low-educated unemployed youths

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JEL classifications

Keywords

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