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Subsidized temporary jobs: lock-in and stepping stone effects

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  • Florent Fremigacci

    () (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Antoine Terracol

Abstract

This article evaluates the effectiveness of subsidized temporary jobs as stepping stones to regular employment. We study a French program (Activité Réduite) that allows job seekers to work part-time while remaining registered with the unemployment agency. Under this program, insured individuals are allowed to concurrently receive part of their unemployment benefits and wage income. Using an administrative data set, we fit a multivariate duration model correcting for the endogenous nature of the time to treatment, the time in treatment, and the level of the subsidy. We find that subsidized temporary jobs have both a significant lock-in effect and a significant positive post-treatment impact on the hazard rate to employment. Since individuals facing a high implicit tax rate have incentives to self-select into better part-time jobs, we also find that a higher tax rate leads to a weaker lockin effect and a stronger post-treatment effect. Simulations suggest that the lock-in effect first dominates, but that the overall effect eventually becomes positive. They also point to ways of improving the effectiveness of the policy.
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Suggested Citation

  • Florent Fremigacci & Antoine Terracol, 2013. "Subsidized temporary jobs: lock-in and stepping stone effects," Post-Print hal-01385894, HAL.
  • Handle: RePEc:hal:journl:hal-01385894
    Note: View the original document on HAL open archive server: https://hal-univ-paris10.archives-ouvertes.fr/hal-01385894
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    References listed on IDEAS

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    Cited by:

    1. Maria Giovanna Bosco & Elisa Valeriani, 2018. "The Road to Permanent Work in Italy: “It’s Getting Dark, Too Dark to See”," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(3), pages 385-419, November.
    2. Nathalie Havet & Xavier Joutard & Alexis Penot, 2019. "Les pratiques d’activité réduite et leurs impacts sur les trajectoires professionnelles : une revue de la littérature," Revue d'économie politique, Dalloz, vol. 129(1), pages 11-47.
    3. Emmanuel Duguet & Rémi Le Gall & Yannick L'horthy & Pascale Petit, 2018. "How does labor market history influence the access to hiring interviews?," Working Papers halshs-01878933, HAL.
    4. Rainer Eppel & Helmut Mahringer, 2019. "Getting a lot out of a little bit of work? The effects of marginal employment during unemployment," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 381-408, May.
    5. Florent Fremigacci & Antoine Terracol, 2013. "Subsidized temporary jobs: lock-in and stepping stone effects," Applied Economics, Taylor & Francis Journals, vol. 45(33), pages 4719-4732, November.
    6. Kyyrä, Tomi & Arranz, José M. & García-Serrano, Carlos, 2019. "Does subsidized part-time employment help unemployed workers to find full-time employment?," Labour Economics, Elsevier, vol. 56(C), pages 68-83.
    7. Florent Fremigacci & Antoine Terracol, 2013. "Subsidized temporary jobs: lock-in and stepping stone effects," Applied Economics, Taylor & Francis Journals, vol. 45(33), pages 4719-4732, November.
    8. Caliendo, Marco & Künn, Steffen & Uhlendorff, Arne, 2016. "Earnings exemptions for unemployed workers: The relationship between marginal employment, unemployment duration and job quality," Labour Economics, Elsevier, vol. 42(C), pages 177-193.
    9. Kyyrä, Tomi & Pesola, Hanna & Rissanen, Aarne, 2017. "Unemployment Insurance in Finland: A Review of Recent Changes and Empirical Evidence on Behavioral Responses," Research Reports 184, VATT Institute for Economic Research.
    10. Kyyrä, Tomi & Arranz, José María & García-Serrano, Carlos, 2017. "Does Part-Time Work Help Unemployed Workers to Find Full-Time Work? Evidence from Spain," IZA Discussion Papers 10770, Institute of Labor Economics (IZA).

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