Does wage subsidy work?

Wage subsidy is a subsidy paid to employers for employing those in the weakest labour market position (253 million euros in 2018). It works in the private sector, but not in the public or third sector. The effects are small, and efficiency is eroded by deadweight loss as well as displacement and substitution effects. The greatest problem is the inadequate evaluation of impact — researchers recommend a move towards randomised trials to support evidence-based decision-making. (AI translation)

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