Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154403
Authors: 
Gamberoni, Elisa
Gradeva, Katerina
Weber, Sebastian
Year of Publication: 
2016
Series/Report no.: 
ECB Working Paper 1970
Abstract: 
This study focuses on the employment effect of a hiring subsidy available to firms with less than 50 employees, granted in the context of the 2012 Spanish labour market reform. Exploiting the arbitrary firm size threshold using regression discontinuity design, estimates show on average 2 percentage points higher employment growth for firms that became eligible for the scheme. However, tests and complementary regressions suggest that the higher employment growth for smaller firms in 2013 is driven by a 2010 reform, which imposes more stringent reporting requirements on larger firms. Accounting for this using difference-in-discontinuity regressions, we fail to find any significant effect of the subsidy on increasing employment of eligible firms. While our study suggests several pitfalls arising from size-contingent regulations, more data are needed to test for benecial long-term effects from the hiring subsidy in addressing duality of the Spanish labour market.
Subjects: 
employment subsidies
firm response
labour market reforms
quasi-experiment
regression discontinuity design
JEL: 
C21
D22
E24
H25
Document Type: 
Working Paper

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