Subsidized temporary jobs: lock-in and stepping stone effects

Florent Fremigacciy and Antoine Terracol
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Florent Fremigacciy: CREST and EPEE, Université d’Évry Val d’Essonne

No 09-10, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: This article evaluates the effectiveness of subsidized temporary jobs as stepping stones to regular employment. We study a French program (Activité Réduite) that allows job seekers to work part-time while remaining registered with the unemployment agency. Under this program, insured individuals are allowed to concurrently receive part of their unemployment benefits and wage income. Using an administrative data set, we fit a multivariate duration model correcting for the endogenous nature of the time to treatment, the time in treatment, and the level of the subsidy. We find that subsidized temporary jobs have both a significant lock-in effect and a significant positive post-treatment impact on the hazard rate to employment. Since individuals facing a high implicit tax rate have incentives to self-select into better part-time jobs, we also find that a higher tax rate leads to a weaker lockin effect and a stronger post-treatment effect. Simulations suggest that the lock-in effect first dominates, but that the overall effect eventually becomes positive. They also point to ways of improving the effectiveness of the policy.

Pages: 31 pages
Date: 2009
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Subsidized temporary jobs: lock-in and stepping stone effects (2013)
Working Paper: Subsidized temporary jobs: lock-in and stepping stone effects (2013)
Working Paper: Subsidized temporary jobs: lock-in and stepping stone effects (2013)
Working Paper: Subsidized temporary jobs: lock-in and stepping stone effects (2013)
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