Lunch Seminar

Annika Nivala (University of Turku)

  • Effects of subsidizing the first employee – Empirical evidence from Finland

  • This paper studies the effects of the first employee employment subsidy implemented in parts of Finland in 2007—2011. The subsidy amounted to 30% of the wage costs of the first employee in the first year and 15% in the second. Using a difference-in-differences approach and data on full population Finnish firms, I estimate the effect on the probability of becoming an employer. According to the results, the effect is close to zero with small standard errors, implying a negligibly small elasticity of becoming an employer. The evidence suggests that the subsidy did not affect entry or exit of firms either. Focusing on more growth oriented subgroups of firms or using different approaches do not change the results. These findings suggest that targeting employment subsidies to non-employer firms may not be an effective way to promote employment and growth in small businesses even though non-employer firms form a large majority of firms.
  • Location:
    Biz Lounge
  • Address:
    Espoo, Ekonominaukio 1
Daniel Hauser

Aalto University

daniel.hauser at