Do Unemployed Workers Benefit from Enterprise Zones? The French Experience

44 Pages Posted: 25 Feb 2012

See all articles by Laurent Gobillon

Laurent Gobillon

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); National Institute of Demographic Studies (INED)

Thierry Magnac

Toulouse School of Economics; University of Toulouse 1 - Industrial Economic Institute (IDEI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Harris Selod

National Institute for Agricultural Research (INRA); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); The World Bank; Paris School of Economics (PSE); World Bank - Development Research Group (DECRG)

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Abstract

This paper presents an impact evaluation of the French enterprise zone program which was initiated in 1997 to help unemployed workers find employment by granting a significant wage-tax exemption (about one third of total labor costs) to firms hiring at least 20% of their labor force locally. Drawing from a unique geo-referenced dataset of unemployment spells in the Paris region over an extensive period of time (1993-2003), we are able to measure the direct effect of the program on unemployment duration, distinguishing between short- and medium-term effects. This is done by implementing an original two-stage empirical strategy using individual data in the first stage and aggregate data and conditional linear matching techniques in the second stage. We show that although the enterprise zones program tended to "pick winners", it is likely to be cost-ineffective. It had a small but significant effect on the rate at which unemployed workers find a job (which is increased by a modest 3 percent). This effect is localized and significant only in the short run (i.e. at best during the 3 years that follow the start of the policy).

Keywords: enterprise zone, evaluation of programs, regional policies, unemployment

JEL Classification: C21, J60, J68, R58

Suggested Citation

Gobillon, Laurent and Magnac, Thierry and Selod, Harris, Do Unemployed Workers Benefit from Enterprise Zones? The French Experience. IZA Discussion Paper No. 6357, Available at SSRN: https://ssrn.com/abstract=2010952

Laurent Gobillon (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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Thierry Magnac

Toulouse School of Economics ( email )

Manufacture des Tabacs
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Toulouse, 31000
France

University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )

Manufacture des Tabacs
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Toulouse Cedex, F-31000
France

IZA Institute of Labor Economics ( email )

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Germany

Centre for Economic Policy Research (CEPR) ( email )

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United Kingdom

Harris Selod

National Institute for Agricultural Research (INRA) ( email )

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+33 1 4313 6362 (Fax)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

The World Bank ( email )

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Paris School of Economics (PSE) ( email )

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World Bank - Development Research Group (DECRG)

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