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Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths

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  • Andrea Albanese
  • Bart Cockx
  • Muriel Dejemeppe

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.

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  • Andrea Albanese & Bart Cockx & Muriel Dejemeppe, 2024. "Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths," Papers 2406.08357, arXiv.org.
    • Handle: RePEc:arx:papers:2406.08357
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    1. Dejemeppe, Muriel & Delpierre, Matthieu & Pourtois, Mathilde, 2024. "Hiring subsidies for low-educated unemployed youths are ineffective in a tight labor market," GLO Discussion Paper Series 1451, Global Labor Organization (GLO).

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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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