Type
Working paper
Title
The Effectiveness of Hiring Credits
In
IZA Discussion Papers
Author(s)
CAHUC Pierre - École polytechnique (X) (Author)
CARCILLO Stéphane - Département d'économie (Author)
LE BARBANCHON Thomas - Centre de Recherche en Économie et Statistique (GENES) (Author)
Editor
Institute of Labor Economics
Collection
IZA Discussion Papers : 11248
Keywords
Hiring credit, Labor demand, Search and matching model
Abstract
EN
This paper analyzes the effectiveness of hiring credits. Using comprehensive administrative data, we show that the French hiring credit, implemented during the Great Recession, had significant positive employment effects and no effects on wages. Relying on the quasi-experimental variation in labor cost triggered by the hiring credit, we estimate a structural search and matching model. Simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features: it was nonanticipated, temporary and targeted at jobs with rigid wages. We estimate that the cost per job created by permanent hiring credits, either countercyclical or time-invariant, in an environment with flexible wages would have been much higher.

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