Do Earnings Subsidies Affect Job Choice? The Impact of SSP Subsidies on Wage Growth
AbstractThis paper asks whether wage subsidies encourages participants to move into jobs with greater wage growth. We provide an analytical framework that identifies the key causal links between earnings subsidies and both within-and between-job wage growth. This framework highlights the importance of the form of the subsidy on the decision about the type of job to accept. We find that the subsidy will lead participants to place a higher value on jobs with wage growth if the relationship between pre-and post-subsidy earnings is convex, but the subsidy is predicted to have no effect on within-job wage growth if the transformation is linear. The subsidy is also predicted to affect between-job wage growth by increasing on-the- job search and altering the reservation wage. We use this framework to analyze the effects of the Canadian Self-Sufficiency Project experiment. We find that this subsidy did not affect within-job wage growth but did increase wage gains between jobs.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 498.
Length: 28 pages
Date of creation: 01 Sep 2001
Date of revision: 26 Aug 2006
Publication status: forthcoming, Canadian Journal of Economics
Note: This paper was previously circulated as "Returns to Tenure, Experience and Job Match for Long-Term Welfare Recipients: Do Earnings Subsidies Matter?"
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Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Web page: http://fmwww.bc.edu/EC/
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Earnings subsidy; wage mobility; job mobility;
Find related papers by JEL classification:
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Helen Connolly & Peter Gottschalk, 2000. "Stepping-stone Jobs: Theory and Evidence," Boston College Working Papers in Economics 427, Boston College Department of Economics, revised 02 Apr 2001.
- David Card & Charles Michalopoulos & Philip K. Robins, 2001. "The Limits to Wage Growth: Measuring the Growth Rate of Wages For Recent Welfare Leavers," NBER Working Papers 8444, National Bureau of Economic Research, Inc.
- Joseph Altonji & R. Shakotko, 1985.
"Do Wages Rise with Job Seniority?,"
567, Princeton University, Department of Economics, Industrial Relations Section..
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