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How effective are hiring subsidies in reducing long-term unemployment among prime-aged jobseekers? Evidence from Belgium

Author

Listed:
  • Desiere Sam

    (Ghent University, Department of Economics, Sint-Pietersplein 6, 9000 Gent, Belgium)

  • Cockx Bart

    (Ghent University, Department of Economics, Sint-Pietersplein 6, 9000 Gent, Belgium)

Abstract

Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers older than 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple-difference methodology, the hiring subsidy is shown to increase the job-finding rate by 13% without any evidence of spillover effects. This effect is driven by a positive effect on individuals with at least a bachelor's degree. However, the hiring subsidy mainly creates temporary short-lived employment: eligible jobseekers are not more likely to find employment that lasts at least 12 consecutive months compared with ineligible jobseekers.

Suggested Citation

  • Desiere Sam & Cockx Bart, 2022. "How effective are hiring subsidies in reducing long-term unemployment among prime-aged jobseekers? Evidence from Belgium," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-38, January.
    • Handle: RePEc:vrs:izajlp:v:12:y:2022:i:1:p:38:n:2
    DOI: 10.2478/izajolp-2022-0003
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    Citations

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    Cited by:

    1. Rainer Eppel & Ulrike Huemer & Helmut Mahringer & Lukas Schmoigl, 2024. "Active Labour Market Policies: What Works for the Long-term Unemployed?," WIFO Working Papers 671, WIFO.
    2. Muriel DEJEMEPPE & Matthieu DELPIERRE & Mathilde POURTOIS, 2024. "Hiring subsidies for low-educated unemployed youths are ineffective in a tight labor market," LIDAM Discussion Papers IRES 2024009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Ernst, Ekkehard & Merola, Rossana & Reljic, Jelena, 2024. "Fiscal policy instruments for inclusive labour markets: A review," GLO Discussion Paper Series 1406, Global Labor Organization (GLO).
    4. Cockx, Bart & Desiere, Sam, 2024. "Labour costs and the decision to hire the first employee," European Economic Review, Elsevier, vol. 170(C).
    5. Albanese, Andrea & Cockx, Bart & Dejemeppe, Muriel, 2024. "Long-term effects of hiring subsidies for low-educated unemployed youths," Journal of Public Economics, Elsevier, vol. 235(C).

    More about this item

    Keywords

    hiring subsidies; long-term unemployment; prime-aged jobseekers; triple difference; temporary help agencies;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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