Working Paper

How Effective Are Hiring Subsidies to Reduce Long-Term Unemployment among Prime-Aged Jobseekers? Evidence from Belgium

Sam Desiere, Bart Cockx
CESifo, Munich, 2021

CESifo Working Paper No. 9325

Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers over 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple difference methodology the hiring subsidy is shown to increase the job finding rate by 13% without any evidence of spill-over effects. This effect is driven by a positive effect on individuals with at least a bachelor’s degree. However, the hiring subsidy mainly created temporary short-lived employment: eligible jobseekers were not more likely to find employment that lasted at least twelve consecutive months than ineligible jobseekers.

CESifo Category
Labour Markets
Keywords: hiring subsidies, long-term unemployment, prime-aged jobseekers, triple difference, temporary help agencies
JEL Classification: H220, J080, J180, J230, J380, J640, J650, J680