IZA DP No. 2432: Income Support Policies for Part-Time Workers: A Stepping-Stone to Regular Jobs? An Application to Young Long-Term Unemployed Women in Belgium
revised version published in: Empirical Economics, 2013, 44 (1), 189 - 229
We verify whether an income support policy for part-time workers in Belgium increases the transition from unemployment to non-subsidised, â€œregularâ€ employment. Using a sample of 8630 long-term unemployed young women, whose labour market history is observed from 1998 to 2001, we implement the â€œtiming of eventsâ€ approach proposed by Abbring and Van den Berg (2003) to control for selection effects. Our results suggest that the policy has a significantly positive effect on the transition to non-subsidised employment when one does not control for unobserved heterogeneity. This effect remains positive, but becomes insignificant, when one corrects for selection on unobservable characteristics.