Do Wage Subsidies Affect The Subsequent Employment Stability Of Permanent Workers?: The Case Of Spain
Source: Universidad Pablo de Olavide
This paper studies how job creation subsidies designed for several Spanish regional governments to foster the creation of new permanent contracts during the period 1997-2004 might affect the subsequent employment stability of the eligible workers. The authors use a triple difference approach that focuses on regional and temporal variability in individual eligibility conditions of these subsidies to obtain the causal effect of the policy. The data comes from the Muestra Continua de Vidas Laborales (MCVL) and from a database that contains information on the policy analyzed. The main result is that workers who are eligible for these subsidies face a higher probability of exiting from their current permanent contract than those who do not.