Wednesday, August 29, 2012

2.3 Billion for Youth Jobs

Employment subsidies: Hollande has just announced 2.3 billion euros' worth. The money is earmarked for underskilled youth in the 16-25 age group. We have been this way before. The move is billed as a boost to French competitiveness, since it will reduce labor costs in some industries. But actually it doesn't reduce costs. It only transfers the costs to the state, meanwhile discouraging industry beneficiaries from investing in new, labor-saving technology to reduce costs over the long run while spurring employment among manufacturers of capital goods. In short, this is a bad investment. To be fair, youth unemployment is quite high, and this will provide some immediate relief. But similar measures have proved disappointing in the past, and there is no reason to think that this time will be different.

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