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

Journal article: 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.

Author(s)

Muriel Roger, Philippe Zamora

Journal
  • Oxford Review of Economic Policy
Date of publication
  • 2011
Keywords JEL
C1 J41 J64
Keywords
  • Active labour-market policies
  • Youth unemployment
  • Evaluation
  • Measurement error
  • Permanent contract
  • Employment subsidies
Pages
  • 380-396
Version
  • 1
Volume
  • 27