Optimal employment subsidies and market structures in industries with unemployment

In this paper we analyze the issue of optimal employment subsidies in imper fectly competitive industries in which a distortion in the labour market ge nerates involuntary unemployment. As a benchmark case, we focus on monopoli es and duopolies and on complete information between firms and government. We characterize the levels and creations of employment in the subsidized in dustry and we check when such employment policies are more favorable to the least productive firms.