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Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes

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  • Sarah Hamersma

    ()
    (Department of Economics, University of Florida)

  • Carolyn Heinrich

    ()
    (LaFollette School of Public Affairs and Institute for Research on Poverty, University of Wisconsin–Madison)

Abstract

Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals while also increasing their use of employment subsidies for doing so. Do these subsidies—the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)—create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies on earnings and job duration using new survey and administrative data. We find that, even controlling for a broad range of worker and firm characteristics, some important differences persist between THS workers, WOTC/WtW-certified workers, and those who are both THS and WOTC/WtW certified. THS workers who are WOTC certified have similar job duration to eligible unsubsidized workers but much higher quarterly earnings. Among WOTC-certified workers, those in THS firms have similar quarterly earnings to those in other industries but much shorter average job duration. Panel estimates suggest that these effects do not persist over time.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 74 (2008)
Issue (Month): 4 (April)
Pages: 1123-1148

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Handle: RePEc:sej:ancoec:v:74:4:y:2008:p:1123-1148

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  15. Wang-Sheng Lee, 2013. "Propensity score matching and variations on the balancing test," Empirical Economics, Springer, Springer, vol. 44(1), pages 47-80, February.
  16. Sarah Hamersma, 2008. "The effects of an employer subsidy on employment outcomes: A study of the work opportunity and welfare-to-work tax credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 27(3), pages 498-520.
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Cited by:
  1. Jahn, Elke J. & Rosholm, Michael, 2010. "Looking Beyond the Bridge: How Temporary Agency Employment Affects Labor Market Outcomes," IZA Discussion Papers 4973, Institute for the Study of Labor (IZA).
  2. Hamersma, Sarah & Heinrich, Carolyn J. & Mueser, Peter R., 2012. "Temporary Help Work: Compensating Differentials and Multiple Job-Holding," IZA Discussion Papers 6759, Institute for the Study of Labor (IZA).
  3. Jahn, Elke J. & Rosholm, Michael, 2014. "Looking beyond the bridge: The effect of temporary agency employment on labor market outcomes," European Economic Review, Elsevier, Elsevier, vol. 65(C), pages 108-125.
  4. Gunderson, Jill Marie & Hotchkiss, Julie L., 2007. "Job Separation Behavior of WOTC Workers: Results from a Unique Case Study," MPRA Paper 44801, University Library of Munich, Germany.

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