Employment Subsidies Research Articles

Employment Subsidies and Job Insertion of Higher Education Graduates in the Labor Market

This paper uses data from the 24 governorates in Tunisia over the period 2012–2020 to study the relationship between job insertion of higher education graduates into the formal labor market and a number of independent variables, namely active labor supply, labor demand, an active labor market policy program (named the CIVP program), and the waiting time for job insertion. The balanced panel, which includes 216 observations for each variable, was the basis of different tests and estimations. The results of the tests allowed the assessment of a fixed effects model and a long-term relationship using FMOLS and VECM models. Results show that, in the long term, active labor supply and the CIVP program have positive effects on the job insertion of higher education graduates. In contrast, the results in the short term do not appear significant, with a negative effect of the CIVP program that reflects the fact that companies exploit most of the benefits of this wage subsidy program on job insertion before final recruitment. Using the ARDL model, the individual results by governate show specific differences across areas.

The impacts of combining incentives on carpooling for commuting in the Paris region

Carpooling is one solution to help reduce the negative externalities of solo driving. The aim of this study is to analyze the effect of incentives on solo drivers’ intention to carpool. A questionnaire survey was carried out among 1,329 participants, including 590 (38.39%) residents of the Paris metropolitan area who use a car to get to work. Modal choice estimates were modeled using multinomial logit and binomial logit econometric models for car drivers only. First, we analyzed the effect of non-financial incentives, such as nudges and trust in others during the carpooling trip. Second, we analyzed the effect of the combination of nudges with employer subsidies for sustainable mobility on the intention to carpool as a driver or passenger for the home-to-work (or home-to-school) commute. The results show that people aged 18–49, employees, and those with higher levels of education are more receptive to behavioral interventions such as nudges. Applying nudges in isolation is more effective at encouraging carpooling for commuting than combining nudges with employers’ subsidies for sustainable mobility.

From welfare to work: The health and material well‐being effects of long‐term employment subsidies in Germany

AbstractThis paper analyses effects of subsidised, predominantly non‐standard, employment within the German labour market programme ‘participation in the labour market’ for long‐term welfare recipients on their health satisfaction, health‐based quality of life, satisfaction with standard of living and households' actual ownership of important goods (e.g., car or new clothes) or the lack thereof due to financial reasons. We differentiated subgroups by health, age and working hours. Data for participants and non‐participants (but entitled to welfare benefits) stem from the first two waves (2020/2021) of the panel survey ‘Quality of Life and Social Participation’. To identify causal effects, we employed matching methods based on administrative and survey data. Our findings show that 1 and 2 years after programme start, participation had significant positive effects on all indicators of health and standard of living. Thus, for the programme's focus group, subsidised employment, even if non‐standard, can contribute to improving health and material well‐being.

From segmentalist to liberal skill formation system: A comparative analysis of labour market activation policies in Japan and South Korea

Abstract This study provides a comparative analysis of the evolution of skill formation systems in Japan and South Korea, considering the nuances in active labour market policies (ALMPs) and institutional transformations in the post-industrial landscape. Both nations initially adopted segmentalist skill formation systems; however, they now exhibit divergent paths. Korea, in particular, has undergone institutional changes from segmentalist to a liberal skill formation system, with firms reducing their involvement in skill formation, resulting in a pronounced skill formation gap. Firms have curtailed their role in skill formation in alignment with environmental changes, and ALMPs have primarily centred on job creation for the elderly and small- and medium-sized enterprise employment subsidies. Conversely, Japan has maintained consistent policy approaches despite similar environmental changes. This study highlights that these divergent trajectories are rooted in the different stages of institutional maturity established during industrialization.

Combined and distributional effects of EPL reduction and hiring incentives: an assessment using the Italian “Jobs Act”

After two decades of labour market reforms at the margin, the great recession created political scope to reduce the employment protection still benefitting the workers on open-ended contracts. To support employment levels, these policies have generally been combined with generous employment subsidies. While the theoretical and empirical literature on the two interventions taken in isolation appear generally abundant, almost nothing is known when they come combined. Analogously, no evidence is available on their distributional effects. This paper aims to fill these two gaps by means of counterfactual models estimated on high-frequency employer-employee-linked Italian data. Taking advantage of the quasi-experimental conditions created by the reforms enforced in Italy in 2015, we fit a (non-linear) difference-in-differences strategy into a competing risks duration model. We find prompt sensitivity of small firms to the incentives, while the large ones waited until they were combined with lower firing costs. Small firms substitute temporary for permanent employment, while larger ones do not seem inclined to forego fixed-term contracts, possibly for a probationary period. The reforms have benefitted domestic workers over foreigners, prime-age and older individuals over the young, and those with higher human capital. No gender effects emerge. Small firms operating in non-innovative sectors carry the bulk of heterogeneity effects. Finally, analysis on duration of newly activated open-ended contracts reveals a transitory effect, as separations jumped once the subsidies came to an end.

Peer Effects in the Adoption of a Youth Employment Subsidy

Abstract This paper studies the effects of peers on the adoption of a Youth Employment Subsidy in Chile since its inception. We examine the effects that former classmates' and coworkers' adoption have on one's adoption. Identification comes from discontinuities in the assignment rule that allow us to construct valid instrumental variables for peers' adoption. Using a comprehensive set of administrative records, we find that classmates and especially coworkers play significant roles in the adoption of the subsidy. Peer effects are determined during the early stages of the program's implementation and vary by network characteristics and the strength of network ties.

RESEARCH ON THE POLICY OPERATION EVALUATION AND OPTIMIZATION PATH OF THE ENTREPRENEURSHIP AND EMPLOYMENT OF COLLEGE GRADUATES IN XINXIANG

Employment is the foundation of people's livelihood, and entrepreneurship is the foundation of employment. This article analyzes the implementation effect and existing problems of the policies that have been introduced by Xinxiang City to promote the entrepreneurship and employment of graduates in Xinxiang City, and puts forward the methods of optimizing policies such as taking into account all levels and elements of the policy, improving the publicity system of entrepreneurship and employment policies, formulating diversified entrepreneurship and employment subsidy policies, and increasing the support of college students' entrepreneurship policies.

Longer-term impacts of COVID-19 on SMEs: follow-up research in Sichuan Province, China

ABSTRACT Small and medium enterprises (SMEs) are continuing to be impacted by the COVID-19 pandemic as it moves into its third year. The ‘dynamic COVID-zero’ policy adopted in China from August 2021 to the end of 2022 has inevitably put pressure on local SMEs, which makes the situation in Chinese SMEs not only different from the situation during the initial outbreak, but also unique in the world. In July 2022, an online follow-up questionnaire was conducted on SMEs in Sichuan Province to assess their performances, pressures, and requirements in this particular period of time and compare the results with our findings from 2020 to reveal the longer-term impacts of COVID-19. It was found that: (1) most SMEs had poorer revenue and profit performances; (2) while the pressure of increasing production cost and declining market demand has increased significantly, normal productions and operations are no longer as strongly disturbed; (3) SMEs require more financial support but less operating and employment subsidies; (4) and the SMEs’ overall confidence has recovered and the willingness to invest is rising. The situation in different sectors was also analysed and compared, with the results revealing problems within the tertiary industrial sector (wholesale and retail businesses).

НАПРАВЛЕНИЯ СНИЖЕНИЯ МОЛОДЕЖНОЙ БЕЗРАБОТИЦЫ

The article investigates the problem of youth employment and the role of various mechanisms in solving this problem. The authors discuss the importance of subsidizing the employment of young professionals, the role of business incubators and volunteer activities. They emphasize that youth is a vulnerable category in the labor market, but at the same time is an important source of human capital. The authors point out the priority of reducing youth unemployment in the state social and economic policy. The article emphasizes that employment subsidies, business incubators and volunteer activities play a significant role in supporting and developing youth, contributing to solving the problem of unemployment and creating a quality talent pool for the future development of the economy.

The Employment Cost of Sovereign Default

This paper analyzes the interaction between government default decisions and labor market outcomes in an environment with persistent unemployment and financial frictions. Sovereign risk impairs bank intermediation through balance sheet effects, worsening the conditions for firms to pre-finance wages and vacancies. This generates a new type of endogenous domestic default cost -- the employment cost of default. The persistence of unemployment produces serial defaults and rationalizes high debt-to-GDP ratios. In the dynamic strategic game between the government and the private sector, anticipation effects allow the study of debt crises in addition to outright default episodes. Introducing employment subsidies and bank regulations affect the government's ability to commit to debt repayment.

The Effect of an Employment Subsidy in Persistent Stagnation

The Effect of an Employment Subsidy in Persistent Stagnation

Relationship between Unemployment Rate and Economic Growth in Nepal: An Econometric Estimation

Economic growth and employment are taken as the two major objectives of macroeconomic policy schema in both the developing as well as developed countries. This study aims to determine the relationship between the unemployment rate and GDP growth rate of Nepal using the time-series data from 1991-2020. Difference version approach, dynamic version approach and Granger causality test were used to study the relationship between the macroeconomic variables. The difference version and dynamic version approach showed non-significant results for the regression of unemployment rate on economic growth rate which implies that the unemployment rate is not significantly affected by the economic growth rate of Nepal. The Okun’s coefficient in the difference version was -0.057 and in the dynamic version approach it was -0.058. Thus, the Okun’s law doesn’t seem to hold in case of Nepal’s economy. The Granger causality test also revealed that the change in the unemployment rate is not a predictive variable of the GDP growth rate and vice versa. The non-significant relationship between the macroeconomic variables might thus be affected by other factors. Thus, it can be suggested to the government and policymakers to recuperate the ways of solving the unemployment by formulating economic policies that are more directed towards structural and labor market transformation. Tax reduction policy, increase in government spending, skill enhancement programs and youth employment subsidy can also be suggested.

Perceived accessibility of employment sites by jobseekers and the potential relevance of employer-subsidised demand responsive transport to enhance the commute

The constraints placed by the transport options available to job-seekers are key factors for the accessibility of employment locations and therefore social inclusion. The present paper investigates the importance of these constraints and the potential appeal of an employer-subsidised Demand Responsive Transport (DRT) service to job-seekers at risk of social exclusion. Mainly quantitative questionnaire data were obtained from a survey (n = 254) of jobseekers attending three ‘Jobcentre Plus’ government agency offices in Bristol (UK) during September 2017. The offices, which integrate the provision of social security benefits with support to secure work, were in inner-city, intermediate, and peripheral locations. Comparative spatial analysis was conducted both within and between the locations. The respondents emerged as having high public transport dependence for the commute, and transport-related perceived barriers emerged as second in importance only to ‘qualifications and skills’ and were reported as having inhibited attendance at job interviews and jobs. The preferences identified from the literature for finding work near home or in the city centre was confirmed. Reaching employment locations on the periphery of the city was particularly problematic. Job-seekers interviewed at the intermediate location reported the widest geographical scope of search. Logistic regression modelling confirmed the perceived options for public-transport commuters were somewhat different. Gender and the type of work sought also influenced spatial perceptions. Respondents were more willing to share the commute with ‘people they knew’, and strongly supported the concept of employer-subsidised DRT, with some statistically significant gender differences in attractiveness regarding the specific nature of the service offer. It is concluded that employer-subsidised DRT services would be most appropriate for remote sites, in situations in which the labour force is likely to be drawn from areas hard to connect with public transport, and where car use is either low, or being reduced by car use restraint policies. Future research into the context of real-world applications is required to examine whether benefits to employers, including staff recruitment and retention, would be sufficient to justify employer subsidies.

Lost in Categorisation? Employment Subsidies – Bringing the Beneficiaries Back In

AbstractEmployment subsidies are important active labour market policy (ALMP) tools, suited to a variety of labour market challenges. This paper engages with recent ALMP categorisation debates by appraising Cronert’s (2019) recent typology of employment subsidies. It uses empirical material to assess the typology’s explanatory power and produce insights to inform further typological development. The illustrative case of the British ‘Wage Incentive’ (2012-2014) is used to assess the typology’s analytical purchase. Cronert’s typology helpfully identifies key distinctions in the distributional profiles of employment subsidies, but further understanding of the category is impeded by the practice of defining them as demand-side interventions. The paper argues for a reappraisal of their supply-side characteristics, maintaining that the (potential) worker should be included in the analysis, and that employment subsidies’ relationship with training and job creation should be acknowledged. It proposes a redefinition of employment subsidies reflecting their real-world use, and suggests a framework for further exploring varieties of employment subsidy design from the perspective of beneficiaries.

Comment on “Economic Impacts of SARS/MERS/COVID‐19 in Asian Countries”

Comment on “Economic Impacts of <scp>SARS</scp>/<scp>MERS</scp>/<scp>COVID</scp>‐19 in Asian Countries”

Hysteresis from employer subsidies

This paper uses administrative data to analyze a large and 8-year long employer payroll tax rate cut in Sweden for young workers aged 26 or less. We replicate previous results documenting that during the earlier years of the reform, it raised youth employment among the treated workers, driven by labor demand (as workers’ take-home wages did not respond). First, drawing on additional years of data, this paper then documents that the longer-run effects during the reform are twice as large as the medium-run effects. Second, we document novel labor-demand-driven “hysteresis” from this policy – i.e. persistent employment effects even after the subsidy no longer applies – along two dimensions. Over the lifecycle, employment effects persist even after workers age out of eligibility. Three years after the repeal, employment remains elevated at the maximal reform level in the formerly subsidized ages. These hysteresis effects more than double the direct employment effects of the reform. Discrimination against young workers in job posting fell during the reform and does not bounce back after repeal, potentially explaining our results.

Labor Segmentation and Dualisation in Hong Kong

With a strong adherence to liberalism, the labor market in Hong Kong is character-ized by a low level of external regulation and an emphasis on self-adaptation as coping. The government mainly attend to the quality of manpower supplied meet-ing the market need, as well as peaceful industrial relations. Segmentation of labor is a natural result of this lowly regulated liberal market. Benefited from a relatively stable economy, unemployment in the past two decades mainly contained, but dualisation observed with widening income gap, as well as an emerging sector of insecure labor. The recent COVID-19 pandemic is leading to a sudden and unex-pected economic crisis. Though with more ad hoc measures, cautious in regulating the labor market maintained. While we are waiting for further government initia-tives, the ending of the employment subsidy from December will certainly worsen the situation. Further dualisation will be the result.

The effect of the 2008 employment support programme on young men’s labour market outcomes in Turkey: Evidence from a regression discontinuity design

AbstractActive labour market policies (ALMPs), such as subsidies for wages, social security contributions (SSCs) and employment, are one of the most important tools of countries’ efforts to tackle unemployment. The Turkish government launched the employment subsidy programme in 2008, aiming to decrease unemployment and to encourage formal employment by subsidizing the SSCs for relatively disadvantaged groups. The aim of this study is to investigate the effects of the 2008 policy on various labour outcomes. The entire analysis relies on micro‐level panel data derived by the Survey of Income and Living Conditions over the period of 2008–2011. Young men aged between 18 and 29 years are eligible to the programme. To infer causality, we apply a regression discontinuity design analysis using as the cut‐off point those who are aged 30 years. The findings show that the policy of 2008 had a positive impact on employment and the probability of being employed in the formal sector and working full time.

Unemployment and Tax Design

This paper studies optimal income taxation in an environment where matching frictions generate a trade-off for workers between high wages and low unemployment risk. A higher marginal tax rate shifts the trade-off in favor of low unemployment risk, whereas a higher tax burden or unemployment benefit has the opposite effect. Changes in unemployment generate fiscal externalities, which modify optimal tax formulas. I show that optimal employment subsidies (such as the EITC) phase in with income and that the provision of unemployment insurance justifies a positive marginal tax rate even without income heterogeneity. A calibration exercise to the US economy suggests that optimal transfers for low-income individuals are larger if unemployment risk is taken into account.

Lessons from the ongoing crisis for labour market institutions in Russia

The paper discusses the role of unemployment insurance system in economic development in general and in the context of the ongoing crisis due to the forced lockdown related to COVID-19. The key elements of employment subsidy programs with reduced working hours or partial unemployment benefits, based on the experience of OECD countries get special attention.