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Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits

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  • Kenneth A. Couch
  • Douglas J. Besharov
  • David Neumark

Abstract

The continuing adverse labor market effects of the Great Recession have intensified interest in policy efforts to spur job creation. In periods when labor demand and supply are in balance, either hiring credits or worker subsidies can be used to boost employment - hiring credits by reducing labor costs for employers, and worker subsidies by raising the economic returns to work. Historically, both types of policies have been used in pursuit of distributional goals as well, with hiring credits targeting employment of disadvantaged workers, and worker subsidies targeting low-income families. Hiring credits targeting the disadvantaged have generally been regarded as ineffective at both creating jobs and increasing incomes of low-income families, whereas worker subsidies have been viewed as more successful at both. However, in the context of the Great Recession - and severe recessions more generally - hiring credits may be particularly effective at spurring job creation, but only if they are designed quite differently from past hiring credits targeting the disadvantaged. Moreover, establishing a national hiring credit that kicks in during and after recessions may be an effective countercyclical measure - a useful addition to the "automatic stabilizers" already in place, and one that specifically targets job creation.
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  • Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, January.
  • Handle: RePEc:wly:jpamgt:v:32:y:2013:i:1:p:142-171
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. David Neumark, 2012. "Job creation policies and the Great Recession," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue mar19.
    2. Alessio Brown & Johannes Koettl, 2015. "Active labor market programs - employment gain or fiscal drain?," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-36, December.
    3. repec:bla:jfinan:v:72:y:2017:i:3:p:1039-1080 is not listed on IDEAS
    4. Robert S. Chirinko & Daniel J. Wilson, 2016. "Job creation tax credits, fiscal foresight,and job growth: evidence from U.S. States," Working Papers 6, Department of the Treasury, Ministry of the Economy and of Finance.
    5. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, August.
    6. repec:sae:ilrrev:v:70:y:2017:i:5:p:1111-1145 is not listed on IDEAS
    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. Verónica Escudero, 2018. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-26, December.
    9. Sergi JimeÌ nez-MartiÌ n & Arnau Juanmarti Mestres & Judit Vall Castello, 2017. "Hiring subsidies for people with disabilities: Do they work?," Policy Papers 2017-11, FEDEA.
    10. Cahuc, Pierre & Nevoux, Sandra, 2017. "Inefficient Short-Time Work," IZA Discussion Papers 11010, Institute for the Study of Labor (IZA).
    11. J. David Brown & John S. Earle, 2017. "Finance and Growth at the Firm Level: Evidence from SBA Loans," Journal of Finance, American Finance Association, vol. 72(3), pages 1039-1080, June.
    12. Brown, J. David & Earle, John S., 2013. "Do SBA Loans Create Jobs?," IZA Discussion Papers 7544, Institute for the Study of Labor (IZA).
    13. David Neumark & Diego Grijalva, 2013. "The Employment Effects of State Hiring Credits During and After the Great Recession," NBER Working Papers 18928, National Bureau of Economic Research, Inc.
    14. Neumark, David & Grijalva, Diego, 2014. "State hiring credits and recent job growth," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    15. Alessio J. G. Brown, 2015. "Can hiring subsidies benefit the unemployed?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 163-163, June.
    16. 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.
    17. David Neumark & Diego Grijalva, 2017. "The Employment Effects of State Hiring Credits," ILR Review, Cornell University, ILR School, vol. 70(5), pages 1111-1145, October.
    18. 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.
    19. Pierre Cahuc & Stéphane Carcillo & Thomas Le Barbanchon, 2014. "Do Hiring Credits Work in Recessions?: Evidence from France," Sciences Po publications 8330, Sciences Po.

    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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