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Fiscal Stimuli in the Form of Job Creation Subsidies

Chun-Hung Kuo and Hiroaki Miyamoto

No EMS_2014_06, Working Papers from Research Institute, International University of Japan

Abstract: This paper examines the effects of fiscal stimuli in the form of job creation subsidies in a DSGE model with search frictions in the labor market. We consider two types of job creation subsidies: a subsidy to the cost of posting vacancies and a hiring subsidy. Our model demonstrates that qualitative effects of a vacancy cost subsidy are similar to those of a hiring subsidy. Quantitatively, however, the vacancy cost subsidy is more effective in lowering unemployment than the hiring subsidy. We also compute fiscal multipliers for both traditional increases in government spending and increases in job creation subsidies.

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)
Pages: 20 pages
Date: 2014-05
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
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https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2014_06.pdf First version, 2014 (application/pdf)

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Journal Article: Fiscal stimuli in the form of job creation subsidies (2015) Downloads
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