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Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits

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  • David Neumark

Abstract

The continuing adverse labor market effects of the Great Recession have intensified interest in policy efforts to spur job creation. In periods when labor demand and supply are in balance, either hiring credits or worker subsidies can be used to boost employment – hiring credits by reducing labor costs for employers, and worker subsidies by raising the economic returns to work. Historically, both types of policies have been used in pursuit of distributional goals as well, with hiring credits targeting employment of disadvantaged workers, and worker subsidies targeting low-income families. Hiring credits targeting the disadvantaged have generally been regarded as ineffective at both creating jobs and increasing incomes of low-income families, whereas worker subsidies have been viewed as more successful at both. However, in the context of the Great Recession – and severe recessions more generally – hiring credits may be particularly effective at spurring job creation, but only if they are designed quite differently from past hiring credits targeting the disadvantaged. Moreover, establishing a national hiring credit that kicks in during and after recessions may be an effective countercyclical measure – a useful addition to the “automatic stabilizers” already in place, and one that specifically targets job creation.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16866.

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Date of creation: Mar 2011
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Publication status: published as Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, 01.
Handle: RePEc:nbr:nberwo:16866

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  1. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low-Income Families," JCPR Working Papers 69, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
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  4. 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., vol. 27(3), pages 498-520.
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  7. M. Keane & R. Mofitt, 1995. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," Working Papers 95-4, Brown University, Department of Economics.
  8. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
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  10. Andrew Leigh, 2005. "Who Benefits from the Earned Income Tax Credit? Incidence Among Recipients, Coworkers and Firms," CEPR Discussion Papers 494, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  11. Neumark, David & Wall, Brandon & Zhang, Junfu, 2008. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," IZA Discussion Papers 3888, Institute for the Study of Labor (IZA).
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  17. Timothy J. Bartik & George Erickcek, 2010. "The Employment and Fiscal Effects of Michigan's MEGA Tax Credit Program," Upjohn Working Papers and Journal Articles 10-164, W.E. Upjohn Institute for Employment Research.
  18. Timothy J. Bartik, 2001. "Jobs for the Poor: Can Labor Demand Policies Help?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number tjb2001, December.
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Cited by:
  1. David Neumark & Diego Grijalva, 2013. "The Employment Effects of State Hiring Credits During and After the Great Recession," NBER Working Papers 18928, National Bureau of Economic Research, Inc.
  2. David Neumark, 2012. "Job creation policies and the Great Recession," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue mar19.
  3. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, 08.
  4. Escudero, Veronica, 2014. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," MPRA Paper 55319, University Library of Munich, Germany.
  5. Brown, J. David & Earle, John S., 2013. "Do SBA Loans Create Jobs?," IZA Discussion Papers 7544, Institute for the Study of Labor (IZA).
  6. Neumark, David & Grijalva, Diego, 2014. "State hiring credits and recent job growth," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.

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