Seminario 'The Effectiveness of Hiring Credits'

11 horas

Pierre Cahuc
Ecole Polytechnique. Paris

'The Effectiveness of Hiring Credits'
Abstract: This paper analyzes the effectiveness of temporary countercyclical 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 variations 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 relies to a large extent on its temporary nature and on high binding rigid wages. We estimate that the cost per job created by permanent hiring credits in an environment with flexible wages would have been about 13 times larger.