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Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies?

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  • Michael Lechner
  • Benjamin Schünemann
  • Conny Wunsch

    ()
    (University of Basel)

Abstract

We evaluate a wage subsidy program that is targeted at long-term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies con­ducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availability of the subsidy on labor market out­comes of the target group. Even though our analysis lacks some statistical power, our findings do not support the substantial positive effects obtained from matching studies. As our ap­proach does not require observability of all drivers of selection, previous empirical studies justifying government expenditures on wage subsidies based on matching methods should be reconsidered.

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Bibliographic Info

Paper provided by Faculty of Business and Economics - University of Basel in its series Working papers with number 2013/14.

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Date of creation: 2013
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Handle: RePEc:bsl:wpaper:2013/14

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Keywords: Wage subsidy; long-term unemployment; regression discontinuity;

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References

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Cited by:
  1. Lechner, Michael & Wunsch, Conny & Scioch, Patrycja, 2013. "Do Firms Benefit from Active Labour Market Policies?," IZA Discussion Papers 7614, Institute for the Study of Labor (IZA).
  2. Deuchert, Eva & Kauer, Lukas, 2013. "Hiring subsidies for people with a disability: Helping or hindering? - Evidence from a small scale social field experiment," Economics Working Paper Series 1335, University of St. Gallen, School of Economics and Political Science.

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