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Working Paper
The State Dependent Effectiveness of Hiring Subsidies
The responsiveness of job creation to shocks is procyclical, while the responsiveness of job destruction is countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead to lumpy employment adjustment. The model predicts that policies that aim to stimulate employment by encouraging job creation, such as hiring subsidies, are significantly less effective in recessions: These are times when few firms are near their hiring threshold and many firms are near their firing threshold. Policies that target the job destruction margin, such as employment ...
Briefing
Are Place-Based Policies a Boon for Everyone?
Despite the widespread implementation of locally targeted "place-based" interventions, their optimal design and effectiveness in addressing regional economic disparities remains open. Proponents argue that they can leverage powerful agglomeration economies and benefit underserved areas. Critics highlight potential pitfalls like inefficiency, gentrification and negative spillovers. Evaluating their effectiveness is challenging due to policy heterogeneity and data limitations, as existing evidence presents a mixed picture: Some programs seem to contribute to job creation and poverty reduction, ...