Firm-Directed Active Labor Market Policy

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In Simple Words

Think of open job positions like retail store shelves. When the fee to put a new product on the shelf drops, the store owner adds more items to sell. Assisting employer firms directly reduces their upfront hiring expenses, which lowers the profit threshold required to open and keep permanent job positions filled.

Small and medium firms in France

No proactive agency outreach
0.450 permanent hires per firm
Proactive agency outreach
10.2% more permanent hires

Trial outcome for registered jobseekers. Control firms could request services. This firm-level gain does not measure net job creation across the whole market.

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Research question

Traditional active labor market policies focus almost exclusively on jobseeker search assistance or skill training, which can cause severe displacement effects among jobseekers in depressed labor markets rather than creating net new jobs.

Participants

N = 7,438 French small and medium-sized enterprises (5 to 250 employees) across 129 local employment agencies in France.

Study Design

Stratified randomized controlled trial (RCT) with a 6.5-month sanctuary period, evaluating proactive employer outreach by public employment counselors.

Results

Treated firms exhibited a 24% increase in permanent contract vacancy postings (0.047 additional vacancies over a 0.199 control mean, p < 0.01) and a 10.2% increase in permanent contract hires of registered jobseekers (0.046 additional hires over 0.450 control mean, p < 0.05), generating 17.5 additional theoretical workdays per firm (p < 0.05).

Takeaway

Proactively offer free recruitment services and vacancy cost reductions to small and medium enterprises during economic downturns to stimulate permanent employment demand.

Source and citation

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Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

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