The impact of hiring subsidies on survival of heterogeneous jobs

Matthieu Delpierre

Economics Bulletin, 2022, vol. 42, issue 2, 907 - 912

Abstract: While hiring subsidies are expected to stimulate the creation of jobs, the literature highlights that the wage increases that may result from these subsidies could also increase the number of job destructions. In the presence of wage rigidities, this effect is irrelevant. This paper explores the likely mechanism by which hiring subsidies tend to modify job composition with more low productivity jobs entering the market. Given that these jobs on average survive less long, this composition effect increases the job destruction rate. Also, the share of subsidized jobs increases with the subsidy.

Keywords: Hiring subsidies; job heterogeneity; job survival; matching model (search for similar items in EconPapers)
JEL-codes: J6 (search for similar items in EconPapers)
Date: 2022-06-30
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