Long-term effects of hiring subsidies for low-educated unemployed youths

Andrea Albanese, Bart Cockx, Muriel Dejemeppe

Research output: Contribution to journalArticlepeer-review

Abstract

We use regression discontinuity design and difference-in-differences methods to estimate the impact of a one-time hiring subsidy for low-educated unemployed youths in Belgium during the recovery from the Great Recession. Within a year of unemployment, the subsidy increases job-finding in the private sector by 10 percentage points. Over six years, high school graduates secure 2.8 more quarters of private employment. However, they transition from public jobs and self-employment, resulting in no net increase in overall employment, albeit with better wages. High school dropouts experience no lasting benefits. Additionally, in tight labor markets near Luxembourg's employment hub, the subsidy results in a complete deadweight loss.

Original languageEnglish
Article number105137
JournalJournal of Public Economics
Volume235
DOIs
Publication statusPublished - 1 Jul 2024

Keywords

  • Difference-in-differences
  • Hiring subsidies
  • Low-educated
  • Regression discontinuity design
  • Spillover effects
  • Youth unemployment

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