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Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths

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  • Albanese, Andrea

    (LISER)

  • Cockx, Bart

    (Ghent University)

  • Dejemeppe, Muriel

    (Université catholique de Louvain)

Abstract

We use a regression discontinuity design and difference-in-differences estimators to estimate the impact of a one-shot hiring subsidy for 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, they substitute private for public and self-employment; thus, overall employment does not increase but is still better paid. For high school dropouts, no persistent gains emerge. Moreover, the neighboring employment hub of Luxembourg induces a complete deadweight loss near the border.

Suggested Citation

  • Albanese, Andrea & Cockx, Bart & Dejemeppe, Muriel, 2023. "Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths," IZA Discussion Papers 16153, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16153
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    More about this item

    Keywords

    hiring subsidies; youth unemployment; low-educated; regression discontinuity design; difference-in-differences; spillover effects;
    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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