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The impact of hiring subsidies on survival of heterogeneous jobs

Author

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  • Matthieu Delpierre

    (Walloon Institute of Evaluation, Foresight and Statistics)

Abstract

While hiring subsidies are expected to stimulate the creation of jobs, the literature highlights that the wage increases that may result from these subsidies could also increase the number of job destructions. In the presence of wage rigidities, this effect is irrelevant. This paper explores the likely mechanism by which hiring subsidies tend to modify job composition with more low productivity jobs entering the market. Given that these jobs on average survive less long, this composition effect increases the job destruction rate. Also, the share of subsidized jobs increases with the subsidy.

Suggested Citation

  • Matthieu Delpierre, 2022. "The impact of hiring subsidies on survival of heterogeneous jobs," Economics Bulletin, AccessEcon, vol. 42(2), pages 907-912.
    • Handle: RePEc:ebl:ecbull:eb-22-00127
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    References listed on IDEAS

    as
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    6. Aki Kangasharju, 2007. "Do Wage Subsidies Increase Employment in Subsidized Firms?," Economica, London School of Economics and Political Science, vol. 74(293), pages 51-67, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Hiring subsidies; job heterogeneity; job survival; matching model;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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