Mathilde Pourtois

IRES/LIDAM, UCLouvain

will give a presentation on

Hiring subsidies for low-skilled youths in Wallonia: Short-term impact on employment

Abstract:

Targeted labour cost reductions are commonly used to tackle unemployment of disadvantaged groups in the labour market. The intent is to encourage firms to hire workers from a specific group by lowering their costs. This paper evaluates the impact of a hiring subsidy targeted to low- and medium-skilled unemployed youths in Wallonia, the French-speaking region of Belgium. As of July 2017, this scheme entitles employers hiring young workers with at most a high school diploma to a € 500 monthly subsidy up to three years. Using administrative data, we exploit the discontinuity in the age requirement to estimate the impact of the subsidy on transition to work and cumulative employment of the eligible population. We find that the subsidies do not create new job opportunities for the targeted youths in the short-run: the take up of the subsidy just produces a full deadweight loss. Moreover, there is evidence that overall employment is negatively affected, low-skilled youth turning away from regular -unsubsidized- jobs. These results are robust to different validity tests.

Joint work with Muriel Dejemeppe (IRES/UCLOUVAIN) and Matthieu Delpierre (IWEPS).