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Subsidized temporary jobs: lock-in and stepping stone effects

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  • Florent Fremigacciy

    (CREST and EPEE, Université d’Évry Val d’Essonne)

  • Antoine Terracol

    (EQUIPPE, Universités de Lille and CES, Université Paris 1)

Abstract

This article evaluates the effectiveness of subsidized temporary jobs as stepping stones to regular employment. We study a French program (Activité Réduite) that allows job seekers to work part-time while remaining registered with the unemployment agency. Under this program, insured individuals are allowed to concurrently receive part of their unemployment benefits and wage income. Using an administrative data set, we fit a multivariate duration model correcting for the endogenous nature of the time to treatment, the time in treatment, and the level of the subsidy. We find that subsidized temporary jobs have both a significant lock-in effect and a significant positive post-treatment impact on the hazard rate to employment. Since individuals facing a high implicit tax rate have incentives to self-select into better part-time jobs, we also find that a higher tax rate leads to a weaker lockin effect and a stronger post-treatment effect. Simulations suggest that the lock-in effect first dominates, but that the overall effect eventually becomes positive. They also point to ways of improving the effectiveness of the policy.

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File URL: http://epee.univ-evry.fr/RePEc/2009/09-10.pdf
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Bibliographic Info

Paper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 09-10.

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Length: 31 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:eve:wpaper:09-10

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  1. Pierre Granier & Xavier Joutard, 1999. "L'activité réduite favorise-t-elle la sortie du chômage ?," Économie et Statistique, Programme National Persée, vol. 321(1), pages 133-148.
  2. Bruno Crépon & Muriel Dejemeppe & Marc Gurgand, 2005. "Counseling the Unemployed : Does it Lower Unemployment Duration and Recurrence ?," Working Papers 2005-23, Centre de Recherche en Economie et Statistique.
  3. Christian Belzil, 2001. "Unemployment insurance and subsequent job duration: job matching versus unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(5), pages 619-636.
  4. Kyyrä, Tomi & Parrotta, Pierpaolo & Rosholm, Michael, 2009. "The Effect of Receiving Supplementary UI Benefits on Unemployment Duration," Working Papers 09-1, University of Aarhus, Aarhus School of Business, Department of Economics.
  5. Andrea Ichino & Fabrizia Mealli & Tommaso Nannicini, 2008. "From temporary help jobs to permanent employment: what can we learn from matching estimators and their sensitivity?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(3), pages 305-327.
  6. repec:hal:cesptp:hal-00607219 is not listed on IDEAS
  7. Ours, J.C. van, 2004. "The locking-in effect of subsidized jobs," Open Access publications from Tilburg University urn:nbn:nl:ui:12-140882, Tilburg University.
  8. Gerard J. van den Berg & Anders Holm & Jan C. van Ours, 1999. "Do Stepping Stone Jobs exist? Early Career Paths in the Medical Profession," Tinbergen Institute Discussion Papers 99-041/3, Tinbergen Institute.
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  13. Bart, COCKX & Stéphane, ROBIN & Christian, GOEBEL, 2006. "Income support policies for part-time workers : a stepping-stone to regular jobs ? An application to young long-terme unemployed women in Belgium," Discussion Papers (ECON - Département des Sciences Economiques) 2006050, Université catholique de Louvain, Département des Sciences Economiques.
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  15. van Ours, Jan C., 2004. "The locking-in effect of subsidized jobs," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 37-55, March.
  16. Olivier Chardon & Dominique Goux, 2003. "La nouvelle définition européenne du chômage BIT," Économie et Statistique, Programme National Persée, vol. 362(1), pages 67-83.
  17. Terracol, Antoine, 2009. "Guaranteed minimum income and unemployment duration in France," Labour Economics, Elsevier, vol. 16(2), pages 171-182, April.
  18. Lechner, Michael & Pfeiffer, Friedhelm & Spengler, Hannes & Almus, Matthias, 2000. "The impact of non-profit temping agencies on individual labour market success in the West German state of Rhineland-Palatinate," ZEW Discussion Papers 00-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. Boockmann, Bernhard & Hagen, Tobias, 2008. "Fixed-term contracts as sorting mechanisms: Evidence from job durations in West Germany," Labour Economics, Elsevier, vol. 15(5), pages 984-1005, October.
  20. Bonnal, Liliane & Fougere, Denis & Serandon, Anne, 1997. "Evaluating the Impact of French Employment Policies on Individual Labour Market Histories," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 683-713, October.
  21. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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