The effect of temporary employment subsidies on employment duration

In this paper we estimate the impact of temporary employment subsidies for young long-term unemployed workers in Belgium on the transition rate from employment to non-employment. We account for selective participation on the basis of a multivariate duration model with correlated unobserved heterogeneity. Our estimates indicate that the policy decreases the transition rate from employment to non-employment in the first year of participation. There is no significant effect on the transition rates in the second year and after participation