Labour costs and the decision to hire the first employee

Bart Cockx and Sam Desiere

European Economic Review, 2024, vol. 170, issue C

Abstract: Firms without paid employees account for up to 80 % of all firms, but only a small minority ever hires. This paper investigates the relationship between labour costs and the decision to hire a first employee and become an employer. Leveraging a unique policy in Belgium that permanently reduced the labour cost of the first employee by 13 %, we find that the number of new, first-time employers jumped by 31 % immediately following the reform. The elasticity of the probability to hire the first employee with respect to the labour cost is −2.39 [95 % CI: −3.45, −1.25].

Keywords: Nonemployers; Hiring decisions; Payroll taxes; Small businesses (search for similar items in EconPapers)
JEL-codes: D22 H25 J08 J23 L26 M13 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292124001880
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Labour Costs and the Decision to Hire the First Employee (2023)
Working Paper: Labour costs and the decision to hire the first employee (2023)
Working Paper: Labour Costs and the Decision to Hire the First Employee (2023)
Working Paper: Labour costs and the decision to hire the first employee (2023)
Working Paper: Labour costs and the decision to hire the first employee (2023)
Working Paper: Labour costs and the decision to hire the first employee (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:170:y:2024:i:c:s0014292124001880

DOI: 10.1016/j.euroecorev.2024.104859

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().