The "Crowding Out Effect" of the Student Occupation Contract Reform of January 2017 in Belgium

Details

Supervisors

Dejemeppe, Muriel ; Joseph Simon Goerlach

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

The reform of the Belgian law related to the student occupation contract became effective on January 1st, 2017. The reform allows the students and employers who contract within the framework of the student occupation contract to remain exempt from the ordinary social security scheme up to a maximum of 475 hours of work per calendar year. Since its implementation, the reform triggered a substantial increase in both the number of students and the number of hours they have worked. In this paper, I aim at evaluating the existence of a potential “crowding out effect” of students on the employment level of young non-student workers occupied in the HORECA by estimating the overall impact of the student occupation contract reform on the gender and age-specific employment level of non-student workers occupied in the HORECA over the period 2017q1 – 2017q3. To that purpose, I compare the observed growth of the employment level of non-student workers aged between 18 and 24 in the HORECA with its predicted one over the period following the implementation of the reform. The predicted growth is constructed based on the estimates of an identification equation of the employment level of non-student workers in the HORECA. The difference between the observed and predicted growth of the employment level of non-student workers in the HORECA is interpreted as the causal impact of the reform. The results exhibit a negative and significant impact of the reform on the employment level of non-student workers aged between 18 and 24 in the HORECA. This suggests an evidence of a “crowding out effect” of students, especially for the younger age group of 18-19 years old.