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Long-Term Effects of Hiring Subsidies for Unemployed Youths-Beware of Spillovers

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  • Andrea Albanese

    (Luxembourg Institute of Socio-Economic Research (LISER), Luxembourg, Department of Economics, Ghent University, Belgium, IRES/LIDAM, UCLouvain, Belgium, IZA, Bonn, Germany, e GLO, Essen, Germany)

  • Bart Cockx

    (Luxembourg Institute of Socio-Economic Research (LISER), Luxembourg, Department of Economics, Ghent University, Belgium, IRES/LIDAM, UCLouvain, Belgium, CESIfo, Munich, Germany, g ROA, Maastricht University)

  • Muriel Dejemeppe

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

We use (donut) regression discontinuity design and difference-in-differences estimators to estimate the impact of a one-shot hiring subsidy targeted at low-educated unemployed youths during the Great Recession recovery in Belgium. The subsidy increases job-finding in the private sector by 10 percentage points within one year of unemployment. Six years later, high school graduates accumulated 2.8 quarters more private employment. However, because they substitute private for public and self-employment, overall employment does not increase but is still better paid. For high school dropouts, no persistent gains emerge. Moreover, the neighboring attraction pole of Luxembourg induces a complete deadweight near the border.

Suggested Citation

  • Andrea Albanese & Bart Cockx & Muriel Dejemeppe, 2022. "Long-Term Effects of Hiring Subsidies for Unemployed Youths-Beware of Spillovers," LIDAM Discussion Papers IRES 2022019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2022019
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    Cited by:

    1. Bart Cockx & Sam Desiere, 2023. "Labour costs and the decision to hire the first employee," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1071, Ghent University, Faculty of Economics and Business Administration.

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    More about this item

    Keywords

    Hiring subsidies; youth unemployment; cross-border employment; regression discontinuity design; difference-in-differences; spillover effects; displacement;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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