Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279174 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10425
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Firms without paid employees account for up to 80% of all firms, but only a small minority ever hires. This paper investigates the relationship between labour costs and the decision to hire a first employee and become an employer. Leveraging a unique policy in Belgium that permanently reduced the labour cost of the first employee by 13%, we find that the number of new, first-time employers jumped by 31% immediately following the reform. The elasticity of the probability to hire the first employee with respect to the labour cost is −2.39 [95% CI: −3.45, −1.25].
Subjects: 
nonemployers
hiring decisions
payroll taxes
small businesses
JEL: 
D22
H25
J08
J23
L26
M13
Document Type: 
Working Paper
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