Firm-Directed Active Labor Market Policy
RCTReview
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.
Picture this
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.
What the evidence says
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).
- Who was studied
- N = 7,438 French small and medium-sized enterprises (5 to 250 employees) across 129 local employment agencies in France.
- How
- Stratified randomized controlled trial (RCT) with a 6.5-month sanctuary period, evaluating proactive employer outreach by public employment counselors.
What to do
Proactively offer free recruitment services and vacancy cost reductions to small and medium enterprises during economic downturns to stimulate permanent employment demand.
From the source
"We show that this shock led to a 24% increase in open-ended vacancy postings with the PES that translated into a 10% increase in permanent contract hires for registered jobseekers, on average over a six-month treatment period."
Are_Active_Labor_Market_Policies_Directed_at_Firms_Effective_Evidence.pdf