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Do Hiring Credits Work in Recessions?

Author

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  • Pierre Cahuc

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique - IP Paris - Institut Polytechnique de Paris, ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique, CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz])

  • Stéphane Carcillo

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Thomas Le Barbanchon

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper evaluates the impact of an unexpected temporary hiring credit targeted at workers paid below 1.6 times the minimum wage in firms with less than 10 employees in France from December 2008 to December 2009. Using rich administrative data covering all French firms, we find that the program has had a strong and rapid impact on employment. The net cost per job created for the government was around zero. The employment effect was stronger in areas where recruitment was easier. Although the hiring credit was not conditional on net job creation, it did not increase churning of workers. Nevertheless, we estimate that a credit conditional on net job creation above the employment growth threshold of -1%, would have maximized job creation, and created about 4 times more jobs, at constant budget, provided that take-up had remained the same.

Suggested Citation

  • Pierre Cahuc & Stéphane Carcillo & Thomas Le Barbanchon, 2014. "Do Hiring Credits Work in Recessions?," Working Papers hal-03602366, HAL.
    • Handle: RePEc:hal:wpaper:hal-03602366
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03602366
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    References listed on IDEAS

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    3. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    4. Davide Melcangi, 2018. "The Marginal Propensity to Hire," 2018 Meeting Papers 807, Society for Economic Dynamics.
    5. Egebark, Johan, 2016. "Effects of taxes on youth self-employment and income," Working Paper Series 2016:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Alessio J. G. Brown, 2015. "Can hiring subsidies benefit the unemployed?," IZA World of Labor, Institute of Labor Economics (IZA), pages 163-163, June.
    7. Matthew D. Webb & Arthur Sweetman & Casey Warman, 2016. "Targeting Tax Relief at Youth Employment," Canadian Public Policy, University of Toronto Press, vol. 42(4), pages 415-430, December.
    8. David Neumark, 2016. "Policy levers to increase jobs and increase income from work after the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-38, December.
    9. Olivier Baguelin, 2015. "Commentaire. Contrats aidés des secteurs marchand et non marchand : deux logiques appelant des modalités distinctes d'évaluation ?," Économie et Statistique, Programme National Persée, vol. 477(1), pages 131-140.
    10. Soumitra Shukla, 2021. "Between College and That First Job: Designing and Evaluating Policies for Hiring Diversity," International Finance Discussion Papers 1331, Board of Governors of the Federal Reserve System (U.S.).
    11. Bernhard Boockmann, 2015. "The effects of wage subsidies for older workers," IZA World of Labor, Institute of Labor Economics (IZA), pages 189-189, September.
    12. Sjögren, Anna & Vikström, Johan, 2015. "How long and how much? Learning about the design of wage subsidies from policy changes and discontinuities," Labour Economics, Elsevier, vol. 34(C), pages 127-137.
    13. Eliason, Marcus & Hensvik, Lena & Kramarz, Francis & Nordström Skans, Oskar, 2017. "The causal impact of social Connections on firms' outcomes," Working Paper Series 2017:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    14. Wei‐Neng Wang & Chia‐Ying Liu & Juin‐Jen Chang, 2021. "Tax policy implications for a two‐engine growing economy," Southern Economic Journal, John Wiley & Sons, vol. 87(3), pages 979-1009, January.
    15. Paolo Sestito & Eliana Viviano, 2016. "Hiring incentives and/or firing cost reduction? Evaluating the impact of the 2015 policies on the Italian labour market," Questioni di Economia e Finanza (Occasional Papers) 325, Bank of Italy, Economic Research and International Relations Area.

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    Keywords

    Hiring Credit; Labor Demand;

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