IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp13478.html
   My bibliography  Save this paper

Can Subsidized Employment Tackle Long-Term Unemployment? Experimental Evidence from North Macedonia

Author

Listed:
  • Armand, Alex

    (Nova School of Business and Economics)

  • Carneiro, Pedro

    (University College London)

  • Tagliati, Federico

    (Bank of Spain)

  • Xia, Yiming

    (University College London)

Abstract

This paper examines the impact of an experiment in North Macedonia in which vulnerable unemployed individuals applying to a subsidized employment program were randomly selected to attend job interviews. Employers hiring a new employee from the target population receive a subsidy covering the wage cost of the worker for the first six months. Using administrative employment data, we find that attending the job interview led to an increase of 15 percentage points in the likelihood of being employed 3.5 years after the start of the intervention. We also find positive and statistically significant effects on individuals' non-cognitive and work-related skills.

Suggested Citation

  • Armand, Alex & Carneiro, Pedro & Tagliati, Federico & Xia, Yiming, 2020. "Can Subsidized Employment Tackle Long-Term Unemployment? Experimental Evidence from North Macedonia," IZA Discussion Papers 13478, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13478
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp13478.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
    2. David McKenzie, 2017. "How Effective Are Active Labor Market Policies in Developing Countries? A Critical Review of Recent Evidence," The World Bank Research Observer, World Bank, vol. 32(2), pages 127-154.
    3. Oriana Bandiera & Vittorio Bassi & Robin Burgess & Imran Rasul & Munshi Sulaiman & Anna Vitali, 2025. "The Search for Good Jobs: Evidence from a Six-Year Field Experiment in Uganda," Journal of Labor Economics, University of Chicago Press, vol. 43(3), pages 885-935.
    4. Levinsohn, James & Pugatch, Todd, 2014. "Prospective analysis of a wage subsidy for Cape Town youth," Journal of Development Economics, Elsevier, vol. 108(C), pages 169-183.
    5. David H. Autor & Susan N. Houseman, 2010. "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from "Work First"," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 96-128, July.
    6. Eliana Carranza & David McKenzie, 2024. "Job Training and Job Search Assistance Policies in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 38(1), pages 221-244, Winter.
    7. Michael Kvasnicka, 2009. "Does Temporary Help Work Provide a Stepping Stone to Regular Employment?," NBER Chapters, in: Studies of Labor Market Intermediation, pages 335-372, National Bureau of Economic Research, Inc.
    8. Ceyhun Elgin & M. ayhan Köse & Franziska Ohnsorge & Shu Yu, 2021. "Understanding Informality Abstract:," Working Papers 2021/03, Bogazici University, Department of Economics.
    9. Michèle Belot & Philipp Kircher & Paul Muller, 2019. "Providing Advice to Jobseekers at Low Cost: An Experimental Study on Online Advice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1411-1447.
    10. Kose, M. Ayhan & Elgin, Ceyhun & Ohnsorge, Franziska & Yu, Shu, 2021. "Understanding Informality," CEPR Discussion Papers 16497, C.E.P.R. Discussion Papers.
    11. Emanuela Galasso & Martin Ravallion & Agustin Salvia, 2004. "Assisting the Transition from Workfare to Work: A Randomized Experiment," ILR Review, Cornell University, ILR School, vol. 58(1), pages 128-142, October.
    12. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    13. Heckman, James J. & Kautz, Tim, 2012. "Hard evidence on soft skills," Labour Economics, Elsevier, vol. 19(4), pages 451-464.
    14. Lisa B. Kahn & Fabian Lange, 2014. "Employer Learning, Productivity, and the Earnings Distribution: Evidence from Performance Measures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1575-1613.
    15. Girum Abebe & A Stefano Caria & Marcel Fafchamps & Paolo Falco & Simon Franklin & Simon Quinn, 2021. "Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City [Endogenous Stratification in Randomized Experiments]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1279-1310.
    16. Alex Armand & Orazio Attanasio & Pedro Carneiro & Valérie Lechene, 2020. "The Effect of Gender-Targeted Conditional Cash Transfers on Household Expenditures: Evidence from a Randomized Experiment," The Economic Journal, Royal Economic Society, vol. 130(631), pages 1875-1897.
    17. David Card & Jochen Kluve & Andrea Weber, 2018. "What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 894-931.
    18. Peter Gottschalk, 2005. "Can work alter welfare recipients' beliefs?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(3), pages 485-498.
    19. Livia Alfonsi & Oriana Bandiera & Vittorio Bassi & Robin Burgess & Imran Rasul & Munshi Sulaiman & Anna Vitali, 2020. "Tackling Youth Unemployment: Evidence From a Labor Market Experiment in Uganda," Econometrica, Econometric Society, vol. 88(6), pages 2369-2414, November.
    20. David S. Lee, 2009. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 1071-1102.
    21. Miriam Bruhn, 2020. "Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? Evidence from Mexico," Journal of Development Studies, Taylor & Francis Journals, vol. 56(8), pages 1558-1577, July.
    22. Almlund, Mathilde & Duckworth, Angela Lee & Heckman, James & Kautz, Tim, 2011. "Personality Psychology and Economics," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 1-181, Elsevier.
    23. Hardy,Morgan L. & Mbiti,Isaac Mulangu & Mccasland,Jamie Lee & Salcher,Isabelle, 2019. "The Apprenticeship-to-Work Transition : Experimental Evidence from Ghana," Policy Research Working Paper Series 8851, The World Bank.
    24. Gabriel Brown & Morgan Hardy & Isaac Mbiti & Jamie McCasland & Isabelle Salcher, 2024. "Can Financial Incentives to Firms Improve Apprenticeship Training? Experimental Evidence from Ghana," American Economic Review: Insights, American Economic Association, vol. 6(1), pages 120-136, March.
    25. Dubin, Jeffrey A. & Rivers, Douglas, 1993. "Experimental estimates of the impact of wage subsidies," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 219-242, March.
    26. Almeida, Rita & Arbelaez, Juliana & Honorati, Maddalena & Kuddo, Arvo & Lohmann, Tanja & Ovadiya, Mirey & Pop, Lucian & Puerta, Maria Laura Sanchez & Weber, Michael, 2012. "Improving access to jobs and earnings opportunities : the role of activation and graduation policies in developing countries," Social Protection Discussion Papers and Notes 67610, The World Bank.
    27. James Levinsohn & Neil Rankin & Gareth Roberts & Volker Schöer, 2014. "Wage subsidies and youth employment in South Africa: Evidence from a randomised control trial," Working Papers 02/2014, Stellenbosch University, Department of Economics.
    28. Cockx, Bart & Van der Linden, Bruno & Karaa, Adel, 1998. "Active Labour Market Policies and Job Tenure," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 685-708, October.
    29. Juliana Arbelaez & Rita Almeida & Arvo Kuddo & Maddalena Honorati & Tanja Lohmann & Mirey Ovadiya & Lucian Pop & Michael Weber & Maria Laura Sanchez Puerta, 2012. "Improving Access to Jobs and Earnings Opportunities : The Role of Activation and Graduation Policies in Developing Countries," World Bank Publications - Reports 13549, The World Bank Group.
    30. Kluve, Jochen & Puerto, Susana & Robalino, David & Romero, Jose M. & Rother, Friederike & Stöterau, Jonathan & Weidenkaff, Felix & Witte, Marc, 2019. "Do youth employment programs improve labor market outcomes? A quantitative review," World Development, Elsevier, vol. 114(C), pages 237-253.
    31. Jespersen, Svend T. & Munch, Jakob R. & Skipper, Lars, 2008. "Costs and benefits of Danish active labour market programmes," Labour Economics, Elsevier, vol. 15(5), pages 859-884, October.
    32. Brian Bell & Richard Blundell & John Reenen, 1999. "Getting the Unemployed Back to Work: The Role of Targeted Wage Subsidies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 339-360, August.
    33. Marjan Petreski & Nikica Mojsoska-Blazevski, 2017. "Overhaul of the social assistance system in Macedonia: Simulating the effects of introducing Guaranteed Minimum Income (GMI) scheme," Finance Think Policy Studies 2017-11, Finance Think - Economic Research and Policy Institute.
    34. Suresh de Mel & David McKenzie & Christopher Woodruff, 2019. "Labor Drops: Experimental Evidence on the Return to Additional Labor in Microenterprises," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 202-235, January.
    35. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
    36. Eskil Heinesen & Leif Husted & Michael Rosholm, 2013. "The effects of active labour market policies for immigrants receiving social assistance in Denmark," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-22, December.
    37. Alex Armand & Orazio Attanasio & Pedro Carneiro & Valérie Lechene, 0. "The Effect of Gender-Targeted Conditional Cash Transfers on Household Expenditures: Evidence from a Randomized Experiment," Economic Journal, Royal Economic Society, vol. 130(631), pages 1875-1897.
    38. Heckman, James J., 2011. "Integrating Personality Psychology into Economics," IZA Discussion Papers 5950, Institute of Labor Economics (IZA).
    39. Suresh de Mel & David McKenzie & Christopher Woodruff, 2010. "Wage Subsidies for Microenterprises," American Economic Review, American Economic Association, vol. 100(2), pages 614-618, May.
    40. Matthew Groh & Nandini Krishnan & David McKenzie & Tara Vishwanath, 2016. "Do Wage Subsidies Provide a Stepping-Stone to Employment for Recent College Graduates? Evidence from a Randomized Experiment in Jordan," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 488-502, July.
    41. Vittorio Bassi & Aisha Nansamba, 2022. "Screening and Signalling Non-Cognitive Skills: Experimental Evidence from Uganda," The Economic Journal, Royal Economic Society, vol. 132(642), pages 471-511.
    42. Gary Burtless, 1985. "Are Targeted Wage Subsidies Harmful? Evidence from a Wage Voucher Experiment," ILR Review, Cornell University, ILR School, vol. 39(1), pages 105-114, October.
    43. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 1-35.
    44. David H. Autor, 2009. "Studies of Labor Market Intermediation," NBER Books, National Bureau of Economic Research, Inc, number auto07-1, March.
    45. Layard, P R G & Nickell, S J, 1980. "The Case for Subsidising Extra Jobs," Economic Journal, Royal Economic Society, vol. 90(357), pages 51-73, March.
    46. Betcherman, Gordon & Olivas, Karina & Dar, Amit, 2004. "Impacts of active labor market programs : new evidence from evaluations with particular attention to developing and transition countries," Social Protection Discussion Papers and Notes 29142, The World Bank.
    47. Nicholas Kaldor, 1936. "Wage Subsidies as a Remedy for Unemployment," Journal of Political Economy, University of Chicago Press, vol. 44(6), pages 721-721.
    48. Marjan Petreski & Nikica Mojsoska Blazevski, 2017. "Overhaul of the social assistance system in Macedonia: Simulating the effects of introducing Guaranteed Minimum Income (GMI) scheme," Finance Think Policy Studies 2017-11/11, Finance Think - Economic Research and Policy Institute.
    49. Imbens,Guido W. & Rubin,Donald B., 2015. "Causal Inference for Statistics, Social, and Biomedical Sciences," Cambridge Books, Cambridge University Press, number 9780521885881, January.
    50. Abebe, Girum & Caria, Stefano & Fafchamps, Marcel & Falco, Paolo & Franklin, Simon & Quinn, Simon, 2017. "Anonymity of distance? Job search and labour market exclusion in a growing African city," LSE Research Online Documents on Economics 86573, London School of Economics and Political Science, LSE Library.
    51. Amanda Pallais, 2014. "Inefficient Hiring in Entry-Level Labor Markets," American Economic Review, American Economic Association, vol. 104(11), pages 3565-3599, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johansson De Silva,Sara & Santos,Indhira Vanessa, 2023. "Productive Longevity : What Can Work in Low- and Middle-Income Countries?," Policy Research Working Paper Series 10636, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abdellatif Chatri & Khadija Hadef & Naima Samoudi, 2021. "Micro-econometric evaluation of subsidized employment in morocco: the case of the "Idmaj" program," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-13, December.
    2. Chatri, Abdellatif & Hadef, Khadija & Samoudi, Naima, 2021. "Micro-econometric evaluation of subsidized employment in morocco: the case of the "Idmaj" program," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-17.
    3. repec:iab:iabjlr:v:55:i::p:art.17 is not listed on IDEAS
    4. Livia Alfonsi & Oriana Bandiera & Vittorio Bassi & Robin Burgess & Imran Rasul & Munshi Sulaiman & Anna Vitali, 2020. "Tackling Youth Unemployment: Evidence From a Labor Market Experiment in Uganda," Econometrica, Econometric Society, vol. 88(6), pages 2369-2414, November.
    5. Abel,Martin & Carranza,Eliana & Geronimo,Kimberly Jean & Ortega Hesles,Maria Elena, 2022. "Can Temporary Wage Incentives Increase Formal Employment ? Experimental Evidence from Mexico," Policy Research Working Paper Series 10234, The World Bank.
    6. Andrea Kiss & Robert Garlick & Kate Orkin & Luke Hensel, 2023. "Jobseekers’ Beliefs about Comparative Advantage and (Mis)Directed Search," Upjohn Working Papers 23-388, W.E. Upjohn Institute for Employment Research.
    7. Chatri Abdellatif & Tahir Najia, 2023. "How do COVID-19 re-hiring subsidies affect unemployment duration and incomes in Morocco? An instrumental variable approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 12(1), pages 1-19, December.
    8. Emily A. Beam & Stella Quimbo, 2023. "The Impact of Short-Term Employment for Low-Income Youth: Experimental Evidence from the Philippines," The Review of Economics and Statistics, MIT Press, vol. 105(6), pages 1379-1393, November.
    9. Beber, Bernd & Frohnweiler, Sarah & Lakemann, Tabea & Anti Partey, Peter & Schnars, Regina & Lay, Jann, 2025. "Skills trainings and Bayesian learning: A multisite randomized controlled trial in Ghana," Ruhr Economic Papers 1170, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Groh, Matthew & Krishnan, Nandini & McKenzie, David & Vishwanath, Tara, 2012. "Soft skills or hard cash ? the impact of training and wage subsidy programs on female youth employment in Jordan," Policy Research Working Paper Series 6141, The World Bank.
    11. Banerjee, Abhijit V. & Chiplunkar, Gaurav, 2024. "How important are matching frictions in the labor market? Experimental & non-experimental evidence from a large Indian firm," Journal of Development Economics, Elsevier, vol. 171(C).
    12. Chakravorty, Bhaskar & Arulampalam, Wiji & Bhatiya, Apurav Yash & Imbert, Clément & Rathelot, Roland, 2024. "Can information about jobs improve the effectiveness of vocational training? Experimental evidence from India," Journal of Development Economics, Elsevier, vol. 169(C).
    13. David McKenzie, 2017. "How Effective Are Active Labor Market Policies in Developing Countries? A Critical Review of Recent Evidence," The World Bank Research Observer, World Bank, vol. 32(2), pages 127-154.
    14. Crepon,Bruno Jacques Jean Philippe & Premand,Patrick, 2018. "Creating new positions ? direct and indirect effects of a subsidized apprenticeship program," Policy Research Working Paper Series 8561, The World Bank.
    15. Bernd Beber & Tabea Lakemann & Regina Schnars & Jann Lay, 2025. "Employment Effects of Skills Trainings in Sub-Saharan Africa: A Systematic Review of Recent Randomized Controlled Trials," De Economist, Springer, vol. 173(1), pages 87-120, March.
    16. Araujo,Caridad & Baird,Sarah Jane & Das,Saini & Ozler,Berk & Parisotto,Luca & Woldehanna,Tassew, 2024. "Social Protection and Youth," Policy Research Working Paper Series 10832, The World Bank.
    17. Mathias Allemand & Martina Kirchberger & Sveta Milusheva & Carol Newman & Brent Roberts & Vincent Thorne, 2023. "Conscientiousness and Labor Market Returns: Evidence from a Field Experiment in West Africa," Trinity Economics Papers tep0123, Trinity College Dublin, Department of Economics.
    18. M. Antonella Mancino & Leonardo Fabio Morales & Diego F. Salazar, 2023. "Signaling Worker Quality in a Developing Country: Lessons from a Certification Program," Borradores de Economia 1259, Banco de la Republica de Colombia.
    19. Santiago Caicedo & Miguel Espinosa & Arthur Seibold, 2022. "Unwilling to Train?—Firm Responses to the Colombian Apprenticeship Regulation," Econometrica, Econometric Society, vol. 90(2), pages 507-550, March.
    20. Laurel Wheeler & Robert Garlick & Eric Johnson & Patrick Shaw & Marissa Gargano, 2022. "LinkedIn(to) Job Opportunities: Experimental Evidence from Job Readiness Training," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 101-125, April.
    21. Chakravarty, Shubha & Lundberg, Mattias & Nikolov, Plamen & Zenker, Juliane, 2019. "Vocational training programs and youth labor market outcomes: Evidence from Nepal," Journal of Development Economics, Elsevier, vol. 136(C), pages 71-110.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp13478. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.