Making Employers: The Effects of the Finnish Hiring Subsidy Experiment

The intervention offers non-employer firms a subsidy covering 50% of the wage costs of new employees. The maximum amount of the subsidy is 10 000 euros. The subsidy can be used for employee wage costs over 12 months from the application date. To receive the subsidy, a firm in the treatment group must hire an employee and apply for the subsidy. The subsidy payment is made without application and is based on the mandatory monthly wage declarations made by the employer for the tax authority.

2022-03-10

2023-12-31

Employer status

The primary outcome is a binary indicator for having positive employee wage costs. It is based on mandatory declarations of monthly wages made by the employer for the tax authority.

The first part of the study will focus on short-term outcomes. Subsequent analysis stages will examine long-term outcomes.

Wage costs, number of employees, firm performance, type and source of employees, worker flows.

Wage costs and firm performance measures are drawn from the tax records, financial statements, and Statistics Finland company surveys.

Employee characteristics and individual-level labor market data are drawn from administrative records and Statistics Finland population panels. Individuals are merged to firms with linked employer-employee population panel data.

The primary aim of the experiment is to identify the effect of the hiring subsidy on the likelihood of a non-employer firm becoming an employer. The target population of the experiment includes all non-employer firms in Finland that had no employees within 12 months prior to the experiment and sales between 15 000 and one million euros in 2021, with some exceptions defined by the Act of Parliament on the experiment (e.g., companies that have records of outstanding tax liabilities or negligence in tax return filing in the tax debt register are not in the target population).

The subsidy is offered in two phases. In the first phase, beginning on March 1 2022, 3 500 randomly assigned firms in the target population will be offered the subsidy. They will have time until the end of July 2022 to apply for the subsidy and hire an employee. If less than 900 firms apply for the subsidy in the first phase, the second phase, beginning on August 1 2022, will be initiated. The target population in the second phase excludes first-phase treatment and control groups. The size of the treatment group in the second phase will be determined based on the first-phase take-up rate and pre-second-phase data, targeting a total of 900 subsidy recipients in the first- and second-phase treatment groups together. The second-phase treatment group will have time until the end of December 2022 to apply for the subsidy and hire an employee.

Not available

Computer randomization.

Randomization Method (details):
Stratified random sampling.

Firm.

No

There are no clusters.

Phase 1 sample size: 23 500 firms. Phase 2 sample size: Determined based on the first-phase take-up rate and pre-second-phase data, targeting a total of 900 subsidy recipients in the first- and second-phase treatment groups together.

Phase 1 treatment group: 3 500 firms.

Phase 1 control group: 20 000 firms.

Phase 2 treatment and control groups: Determined based on the first-phase take-up rate and pre-second-phase data, targeting a total of 900 subsidy recipients in the first- and second-phase treatment groups together.