They target key segments of the population and create new job opportunities.

Alex, 2020, “Can Subsidized Employment Tackle Long-Term Unemployment? Experimental Evidence from North Macedonia*” https://www.ucl.ac.uk/~uctppca/ACTX_SEP_JLE.pdf

Overall, this analysis suggests that the main beneficiaries of the SEP are individuals with lower attachment to the labor market, such as women, the inexperienced and those with low education levels. In the absence of the intervention, the employment rates of these workers would be at or below 10%. With the intervention, they are between 15 and 30 percentage points higher. One possible interpretation for this finding is that SEP created job opportunities that these workers would not have otherwise sought, and that these individuals were able to secure the job by accumulating work experience and skills.

To shed more light on this mechanism, we investigate if the program effect on the measures of individual skills varies across different job seekers in a way which is consistent with the heterogeneous employment effects. Figure 5 shows the estimated effect on the non-cognitive skill index (Panel A) and on the job-related skill index (Panel B) for the same groups in Figure 4. We pool together the short-term and medium-term assessments, and estimate such effects jointly on both waves.24 The program has similar positive effects on skills for both males and females, and a larger effect for young as compared to old individuals. We find a large, positive and statistically significant effect on both the non-cognitive skill index and the job-related skill index among individuals with primary education or less, whereas the effects for individuals with secondary education are small and not statistically different from zero. When we condition on the individual previous work experience, we see large and significant effects only for individuals without previous experience, and null effects for the experienced individuals. Consistently with the results shown in Figure 4, the largest program effects are found exactly on less educated and inexperienced individuals. The most likely explanation behind the persistent employment effect is a combination of acquired work experience and skills among individuals who would not have easily found employment, and that the improvement of such skills allows them to secure a job even after the subsidy expired.

This paper studies the impact of a subsidized employment program in North Macedonia targeted to marginalized individuals in long term unemployment. Participating employers are given a wage subsidy that roughly reduced by half the yearly cost of a newly hired worker’s wage and compensated the firm for the training costs. We evaluate the effectiveness of the program in increasing employment of participating job seekers by randomly varying the access to a job interview with the potential employer. In the short run, the SEP program increases the employment rates of individuals who were offered the job interview by more than 20 percentage points. The effect persists even after the end of the subsidized period and of the employer’s contractual obligations, at about 15 percentage points three years after the start of the program. Using the random assignment to the interview as an instrument for being offered a SEP job, we estimate even larger employment impacts, of about 50 percentage points over the counterfactual employment rates of the control group, for those job seekers who were offered the subsidized employment. Such large impacts are mainly concentrated on job seekers with lower counterfactual participation rates in the labor market, such as women, inexperienced and unskilled individuals