The effect of youth employment quotas on the job finding rates of young people in Wallonia

In april 2000, the Belgian federal government launched a special labor market program, whose prominent characteristic was the obligation for companies to occupy in their labor force a certain quota of young people. Based on a sample of more 100,000 young Walloon job seekers (Wallonia is the French-speaking region of Belgium), the aim of this paper is to evaluate whether or not this program has really improved the youth insertion in the labour market, compared to what would have prevailed in the absence of the program. The effect of the program is evaluated through discrete duration models, and estimated by ‘difference in differences’, looking at the individual trajectory on the labor market of young job seekers, before and after the setting up of the program, for the program target group and for a control group. The empirical results show that the program had a modest positive effect for mid-skilled job seekers, but very little effect for unskilled job seekers. On the other hand, as it could be expected, a strong deadweight effect is observed for the skilled young job seekers.