Hiring young, unskilled workers on subsidized open-ended contracts: a good integration programme?

Muriel Roger (1, 2) , Philippe Zamora (3)

1 PSE - Paris-Jourdan Sciences Economiques
2 PSE - Paris School of Economics
3 CREST - Centre de Recherche en Économie et Statistique

Young labour-market entrants account for a high level of unemployment and short-term contracts. In July 2002, the French government moved to reduce this insecurity at the start of working life by introducing the Youth-in-business Contract (Contrat Jeune en Entreprise), a new contract for young people under 22 years old who dropped out of school before passing their final secondary school examinations. Under this scheme, firms were entitled to claim a subsidy when they hired an eligible young worker on an open-ended contract. We assess the impact of the Youth-in-business Contract on transitions to permanent employment by estimating a dynamic difference-in-difference model drawing on the French Labour Force Survey. We use a new method, inspired by Keane and Sauer (2009), to deal with measurement errors in the data. We find that programme eligibility has no effect on transitions to permanent employment in a recession environment.

Mots clés: Active labour-market policies; Youth unemployment; Evaluation; Measurement error; Permanent contract; Employment subsidies

Domaines: Economies et finances

Muriel Roger, Philippe Zamora. Hiring young, unskilled workers on subsidized open-ended contracts: a good integration programme?. Oxford Review of Economic Policy, 2011, 27 (2), pp.380-396. ⟨10.1093/oxrep/grr016⟩. ⟨halshs-00754538⟩