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Employment Policies, Hiring Practices and Firm Performance

  • Sylvie Blasco



  • Barbara Pertold-Gebicka


    (Aarhus Université)

In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer- employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2012-27.

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Length: 26
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:crs:wpaper:2012-27
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  1. Michael Lechner & Conny Wunsch & Patrycja Scioch, 2013. "Do Firms Benefit from Active Labour Market Policies?," CESifo Working Paper Series 4392, CESifo Group Munich.
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  18. Jan C. van Ours, 2007. "Compulsion in active labour market programmes," National Institute Economic Review, National Institute of Economic and Social Research, vol. 202(1), pages 67-78, October.
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  22. Eriksson, Stefan & Lagerström, Jonas, 2004. "Competition between employed and unemployed job applicants: Swedish evidence," Working Paper Series 2004:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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  27. Michael Pries & Richard Rogerson, 2005. "Hiring Policies, Labor Market Institutions, and Labor Market Flows," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 811-839, August.
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  37. Adriana D. Kugler & Gilles Saint-Paul, 2004. "How Do Firing Costs Affect Worker Flows in a World with Adverse Selection?," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 553-584, July.
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