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Long-Term Effects of Hiring Subsidies for Unemployed Youths - Beware of Spillovers

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Author
Andrea Albanese Bart Cockx Muriel Dejemeppe
Category
Quantitative
Date Posted
2022/10/28
Date Retrieved
2023/01/24
Date Revised
Date Written
2022/10/28
Description
We use (donut) regression discontinuity design and difference-in-differences estimatorsto estimate the impact of a one-shot hiring subsidy targeted at low-educated unemployedyouths during the Great Recession recovery in Belgium. The subsidy increases job-findingin the private sector by 10 percentage points within one year of unemployment. Six yearslater high school graduates accumulated 2.8 quarters more private employment. Howeverbecause they substitute private for public and self-employment overall employment doesnot increase but is still better paid. For high school dropouts no persistent gains emerge.Moreover the neighboring attraction pole of Luxembourg induces a complete deadweightnear the border.
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JEL Classifications
C32 J08 J23 J24 J64 J68 J61
Keywords
Hiring subsidies youth unemployment cross-border employment regression discontinuity design difference-in-differences spillover effects displacement
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44
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