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Employer Wage Subsidy Caps and Part-Time Work

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  • Joel A. Elvery
  • C. Lockwood Reynolds
  • Shawn M. Rohlin

Abstract

Using tract-level US Census data and triple-difference estimators, the authors test whether firms increase their use of part-time workers when faced with capped wage subsidies. By limiting the maximum subsidy per worker, such subsidies create incentives for firms to increase the share of their payroll that is eligible for the subsidy by increasing use of part-time or low-wage workers. Results suggest that firms located in federal Empowerment Zones in the United States responded to the program’s capped wage subsidies by expanding their use of part-time workers, particularly in locations where the subsidy cap is likely to bind. Results also show a shift toward hiring lower-skill workers.

Suggested Citation

  • Joel A. Elvery & C. Lockwood Reynolds & Shawn M. Rohlin, 2023. "Employer Wage Subsidy Caps and Part-Time Work," ILR Review, Cornell University, ILR School, vol. 76(1), pages 189-209, January.
    • Handle: RePEc:sae:ilrrev:v:76:y:2023:i:1:p:189-209
    DOI: 10.1177/00197939221102865
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    More about this item

    Keywords

    wage subsidies; hiring credits; part-time work; employer behavior; policy analysis;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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