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DO HIRING SUBSIDIES REDUCE UNEMPLOYMENT AMONG OLDER WORKERS? EVIDENCE FROM NATURAL EXPERIMENTS

Authors


  • The editor in charge of this paper was Orazio Attanasio.

  • Acknowledgments: This study was commissioned by the former Federal Ministry of the Economy and Labor (BMWA) and conducted as part of the evaluation of the proposals of the Hartz Commission. All opinions are our own and do not represent those of the BMWA or its successors. We wish to thank the Institute for Employment Research (IAB) for providing the data base for this study. We gratefully acknowledge the helpful comments of the editor and two anonymous referees, as well as Bernd Fitzenberger, Christian Göbel, Reinhard Hujer, Michael Lechner, and Conny Wunsch. Christoph Junkert provided excellent research assistance. Boockmann is affiliated with the University of Tübingen and is a Research Fellow at IZA. Zwick is a Research Associate at ZEW, Mannheim.

E-mail: bernhard.boockmann@iaw.edu (Boockmann); zwick@bwl.lmu.de (Zwick); Andreas.Ammermueller@BMAS.BUND.DE (Ammermüller)

Abstract

Abstract  We estimate the effects of hiring subsidies for older workers on transitions from unemployment to employment in Germany. Using a natural experiment, our first set of estimates is based on a legal change extending the group of eligible unemployed persons. A subsequent legal change in the opposite direction is used to validate these results. Our data cover the population of unemployed jobseekers in Germany and was specifically made available for our purposes from administrative data. Consistent support for an employment effect of hiring subsidies can only be found for women in East Germany. Concerning other population groups, firms’ hiring behavior is hardly influenced by the program and hiring subsidies mainly lead to deadweight effects. (JEL: J64, H24, C31)

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