What works in wage subsidies for young people: A review of issues, theory, policies and evidence

The International Labour Organisation has invited BI researchers to write a working paper on wage subsidies for young people. The recent economic crisis has had a particularly detrimental effect on the labour market situation of youth, and a number of European countries have introduced hiring subsidies as a means of fighting youth unemployment. Prompted by the resurgent interest of policy-makers in utilizing subsidies to boost job creation, as well as the lack of comprehensive reviews of such policies specifically targeting youth, the working paper is a contribution to filling this gap. A novel feature of the study is that it devotes specific attention to the role of design elements in determining a programme’s effectiveness. After providing a brief taxonomy of subsidy programmes that have been implemented in the last 25 years around the world, the authors examine their effectiveness building on 27 evaluation studies from 19 countries. The working paper is available here.