Do Wages Subsidies Increase Employment in Subsidised Firms?
AbstractThe present paper examines whether subsidised jobs have contributed to the employment in subsidised firms or merely substituted for non-subsidised ones. The data set is an unbalanced panel of some 31,000 firms that are followed annually between 1995 and 2002. The analysis is based on difference-in-differences, which is adjusted by regression and matching methods. The results indicate that wage subsidies stimulate employment, and the magnitude of the effect is as aimed. It is also found that subsidies have no sizable effects on non-subsidised firms of the industry or geographical area in question.
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Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 378.
Date of creation: 30 Dec 2005
Date of revision:
Other versions of this item:
- Aki Kangasharju, 2007. "Do Wage Subsidies Increase Employment in Subsidized Firms?," Economica, London School of Economics and Political Science, vol. 74(293), pages 51-67, 02.
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
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