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Impacts of hiring subsidies targeted at the long-term unemployed on the low-skilled labor market: The French experience

  • Bucher, Anne

This paper proposes a theoretical matching framework to analyze firms' and workers' response to a targeted hiring subsidy program when taking into account interactions between segments of the low-skilled labor market. By developing a general equilibrium model, the paper provides a useful tool to evaluate the aggregate effects induced on the low-skilled labor market. Then, the model is computed above French data to estimate the employment and welfare effects of a measure introduced in France in 1995, the "Initiative-for-Employment Contract". Finally, as the framework is well-suited to investigate design issues, I analyze the efficiency of the French program as well as targeting issues.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 2 (March)
Pages: 553-565

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:2:p:553-565
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  1. Boone, Jan & van Ours, Jan C., 2004. "Effective Active Labor Market Policies," IZA Discussion Papers 1335, Institute for the Study of Labor (IZA).
  2. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," Working Papers 1012, Queen's University, Department of Economics.
  3. Brown, Alessio J G & Merkl, Christian & Snower, Dennis J., 2007. "Comparing the Effectiveness of Employment Subsidies," CEPR Discussion Papers 6334, C.E.P.R. Discussion Papers.
  4. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  5. Forslund, Anders & Johansson, Per & Lindqvist, Linus, 2004. "Employment subsidies - A fast lane from unemployment to work?," Working Paper Series 2004:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  6. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
  7. Barbara Sianesi, 2001. "Differential effects of Swedish active labour market programmes for unemployed adults during the 1990s," IFS Working Papers W01/25, Institute for Fiscal Studies.
  8. Arnaud Chéron & Jean-Olivier Hairault & François Langot, 2008. "A Quantitative Evaluation of Payroll Tax Subsidies For Low-Wage Workers: An Equilibrium Search Approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270295, HAL.
  9. Blanchard, J.O., 1989. "The Aggregate Matching Function," Working papers 538, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
  11. Wouter J. den Haan & Garey Ramey & Joel Watson, 1997. "Job Destruction and Propagation of Shocks," NBER Working Papers 6275, National Bureau of Economic Research, Inc.
  12. Robert G. Fay, 1996. "Enhancing the Effectiveness of Active Labour Market Policies: Evidence from Programme Evaluations in OECD Countries," OECD Labour Market and Social Policy Occasional Papers 18, OECD Publishing.
  13. Gabriele Cardullo & Bruno Van der Linden, 2007. "Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(4), pages 375-404.
  14. Martin, John P. & Grubb, David, 2001. "What works and for whom: a review of OECD countries' experiences with active labour market policies," Working Paper Series 2001:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  15. Matz Dahlberg & Anders Forslund, 2005. "Direct Displacement Effects of Labour Market Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 475-494, 09.
  16. repec:adr:anecst:y:1996:i:41-42:p:09 is not listed on IDEAS
  17. Boone, J. & van Ours, J.C., 2004. "Effective Labor Market Policies," Discussion Paper 2004-87, Tilburg University, Center for Economic Research.
  18. Ben Lockwood, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Oxford University Press, vol. 58(4), pages 733-753.
  19. Orszag, J. Michael & Snower, Dennis J., 2003. "Designing employment subsidies," Labour Economics, Elsevier, vol. 10(5), pages 557-572, October.
  20. J Richardson, 1997. "Wage Subsidies for the Long Term Unemployed: A Search Theoretic Analysis," CEP Discussion Papers dp0347, Centre for Economic Performance, LSE.
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