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Labour Costs and the Decision to Hire the First Employee

Bart Cockx and Sam Desiere

No 10425, CESifo Working Paper Series from CESifo

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: 2023
New Economics Papers: this item is included in nep-lma, nep-mfd, nep-pbe and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.cesifo.org/DocDL/cesifo1_wp10425.pdf (application/pdf)

Related works:
Working Paper: Labour costs and the decision to hire the first employee (2023) Downloads
Working Paper: Labour Costs and the Decision to Hire the First Employee (2023) Downloads
Working Paper: Labour costs and the decision to hire the first employee (2023) Downloads
Working Paper: Labour costs and the decision to hire the first employee (2023) Downloads
Working Paper: Labour costs and the decision to hire the first employee (2023) Downloads
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