This paper studies how employment subsidies for start-ups shape their performance. We exploit an unexpected policy reform in Belgium that permanently exempted start-ups hiring their first employee from payroll taxes for that employee. Using firm-level administrative data and a...

Belgium's 2016 payroll tax exemption for first-time employers triggered a sharp increase in firms hiring their first worker but little growth among larger firms. To account for this pattern, we develop and estimate a directed search model - with discrete hiring, firm heterogeneity, and...

Finland offers a subsidy to employers for hiring individuals with low employment prospects. In 2015, changes to the subsidy's funding caused some regions to unexpectedly suspend new subsidy grants. I examine wages and employment in these regions using a differences-in-differences setting, with...