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Can subsidized employment tackle long-term unemployment? Experimental evidence from North Macedonia

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  • Armand, Alex
  • Carneiro, Pedro
  • Tagliati, Federico
  • Xia, Yiming

Abstract

This study experimentally assesses the effects of temporary wage subsidies on employment in North Macedonia. The target group consists of vulnerable unemployed individuals participating in an employment program that provides employers with a subsidy covering half of the wage payments during the first year of employment, as well as training expenses. Applicants are initially matched to job openings and then randomly selected for job interviews with employers, who decide whether to hire them under the program’s conditions. Using administrative records, we find that being selected for an interview results in a 14-percentage-point increase in the probability of being employed in the formal economy 3.5 years after the start of the program, and an 85% increase in employment duration.

Suggested Citation

  • Armand, Alex & Carneiro, Pedro & Tagliati, Federico & Xia, Yiming, 2026. "Can subsidized employment tackle long-term unemployment? Experimental evidence from North Macedonia," Journal of Development Economics, Elsevier, vol. 178(C).
    • Handle: RePEc:eee:deveco:v:178:y:2026:i:c:s030438782500149x
    DOI: 10.1016/j.jdeveco.2025.103598
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    Keywords

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    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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