Fiscal stimuli in the form of job creation subsidies
Chun-Hung Kuo and
Journal of Macroeconomics, 2015, vol. 43, issue C, 267-284
This paper examines the effects of fiscal stimuli in the form of job creation subsidies in a DSGE model with search friction and endogenous job separation. We consider two types of job creation subsidies: a subsidy for the cost of posting vacancies and a hiring subsidy. This paper finds that the effects of job creation subsides on unemployment differ between models with and without endogenous job separation. While a positive job creation subsidy shock lowers unemployment in a model without endogenous job separation, it increases unemployment in a model with endogenous job separation. We also find that while qualitatively the effects of a vacancy cost subsidy on the economy are similar to those of a hiring subsidy, quantitatively they are different.
Keywords: Fiscal policy; Hiring subsidy; Unemployment; Search and matching (search for similar items in EconPapers)
JEL-codes: E24 E62 J64 (search for similar items in EconPapers)
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Working Paper: Fiscal Stimuli in the Form of Job Creation Subsidies (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:43:y:2015:i:c:p:267-284
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