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The Effectiveness of Hiring Credits

Pierre Cahuc, Carcillo, St�phane and Thomas Le Barbanchon ()

No 12537, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper analyzes the effectiveness of hiring credits. Using comprehensive administrative data, we show that the French hiring credit, implemented during the Great Recession, had significant positive employment effects and no effects on wages. Relying on the quasi-experimental variation in labor cost triggered by the hiring credit, we estimate a structural search and matching model. Simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features: it was non-anticipated, temporary and targeted at jobs with rigid wages. We estimate that the cost per job created by permanent hiring credits, either countercyclical or time-invariant, in an environment with flexible wages would have been much higher.

Keywords: Hiring credit; labor demand; search and matching model (search for similar items in EconPapers)
JEL-codes: C31 C93 J6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-lab and nep-ltv
Date: 2017-12
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