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The use of permanent contracts across Spanish regions: Do regional wage subsidies work?

  • J. Ignacio García-Pérez

    (Universidad Pablo de Olavide, FCEA and FEDEA)

  • Yolanda F. Rebollo Sanz

    (Universidad Pablo de Olavide)

This article evaluates the effectiveness of regional wage subsidies to foster permanent employment using the "Muestra Continua de Vidas Laborales". This dataset, which is used here for the first time to evaluate Spanish labour market policy, offers a complete employment history for each individual, with no aggregation bias. The policy analyzed consists of a one-time subsidy offered by some Spanish regions for new permanent contracts signed for certain fixed-term employees and unemployed workers. Because our policy variable presents individual, regional and temporal variation, we apply a triple difference estimator to identify the average treatment effect of this policy. We conclude that the outflow into permanent employment of eligible workers improves only minimally.

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Article provided by Fundación SEPI in its journal Investigaciones Económicas.

Volume (Year): 33 (2009)
Issue (Month): 1 (January)
Pages: 97-130

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Handle: RePEc:iec:inveco:v:33:y:2009:i:1:p:97-130
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