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Employment Policies, Hiring Practices and Firm Performance

Author Info

  • Blasco, Sylvie

    ()

    (GAINS, Université du Maine)

  • Pertold-Gebicka, Barbara

    ()

    (Aarhus University)

Abstract

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7013.

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Length: 29 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7013
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Keywords: active labour market programmes; counseling and monitoring; hiring decisions; firms performance;

Other versions of this item:

Find related papers by JEL classification:
  • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
  • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
  • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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Cited by:

  1. Lechner, Michael & Wunsch, Conny & Scioch, Patrycja, 2013. "Do Firms Benefit from Active Labour Market Policies?," Economics Working Paper Series 1318, University of St. Gallen, School of Economics and Political Science.
  2. Letifi, N. & Prigent, J.-L., 2014. "On the optimality of funding and hiring/firing according to stochastic demand: The role of growth and shutdown options," Economic Modelling, Elsevier, vol. 40(C), pages 410-422.

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