The Employment Effects of Low-Wage Subsidies

Kristiina Huttunen, Jukka Pirttilä and Roope Uusitalo

No 4931, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Low-wage subsidies are often proposed as a solution to the unemployment problem among the low skilled. Yet the empirical evidence on the effects of low-wage subsidies is surprisingly scarce. This paper examines the employment effects of a Finnish payroll tax subsidy scheme, which is targeted at the employers of older, full-time, low-wage workers. The system's clear eligibility criteria open up an opportunity for a reliable estimation of the causal impacts of the subsidy, using a difference-in-difference-in-differences approach. Our results indicate that the subsidy system had no effects on the employment rate. However, it appears to have increased the probability of part-time workers obtaining full-time employment.

Keywords: employment; social security contributions; low-wage subsidies (search for similar items in EconPapers)
JEL-codes: H24 J23 J68 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-05
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

Published - published in: Journal of Public Economics, 2013, 97, 49–60

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Related works:
Journal Article: The employment effects of low-wage subsidies (2013)
Working Paper: The Employment Effects of Low-Wage Subsidies (2010)
Working Paper: The employment effects of low-wage subsidies (2009)
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