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Employer search and employment subsidies

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  • Riccardo Welters
  • Joan Muysken

Abstract

In this paper insights into the literature on employment subsidy evaluation and that on employer search are merged to explore uncharted territory: the firm and job characteristics leading to deadweight loss in employment subsidy schemes. A model is developed which integrates various arguments found in the existing employer search literature. Using a survey of Dutch firms for 1999, the model predictions are confirmed. The richness of the data set enables one to construct some measures of deadweight loss which are new to the existing literature. It turns out that firms which experience low screening costs (large firms), firms that forego substantial production due to unfilled jobs (vacancies for full-time jobs) and firms operating in slack labour market conditions cause significantly more deadweight loss.

Suggested Citation

  • Riccardo Welters & Joan Muysken, 2006. "Employer search and employment subsidies," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1435-1448.
    • Handle: RePEc:taf:applec:v:38:y:2006:i:12:p:1435-1448
    DOI: 10.1080/00036840500218745
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    Cited by:

    1. Efstathiou, Konstantinos & Mathä, Thomas Y. & Veiga, Cindy & Wintr, Ladislav, 2019. "Active labour market policy use in Luxembourg: evidence from a firm survey," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 53(1), pages 1-12.
    2. Konstantinos Efstathiou & Thomas Y. Mathä & Cindy Veiga & Ladislav Wintr, 2019. "Active labour market policy use in Luxembourg: evidence from a firm survey," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-17, December.
    3. Nabanita Datta Gupta & Mona Larsen & Lars Thomsen, 2015. "Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
    4. repec:use:tkiwps:3535 is not listed on IDEAS
    5. Moczall, Andreas, 2015. "The effect of hiring subsidies on regular wages," IAB-Discussion Paper 201501, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Nabanita Datta Gupta & Mona Larsen & Lars Brink Thomsen, 2013. "Do wage subsidies for disabled workers result in deadweight loss? – evidence from the Danish Flexjob scheme," Economics Working Papers 2013-24, Department of Economics and Business Economics, Aarhus University.
    7. Moczall, Andreas, 2015. "The effect of hiring subsidies on regular wages," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113225, Verein für Socialpolitik / German Economic Association.
    8. Welters, Riccardo & Muysken, Joan, 2008. "Inferring Employer Search Behaviour from Wage Subsidy Participation," Labour Economics, Elsevier, vol. 15(5), pages 844-858, October.
    9. Moczall, Andreas, 2013. "Subsidies for substitutes? : New evidence on deadweight loss and substitution effects of a wage subsidy for hard-to-place job-seekers," IAB-Discussion Paper 201305, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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