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

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Author Info
Sarah Hamersma (University of Florida)
Carolyn Heinrich (University of Wisconsin-Madison)
Abstract

Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more 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 using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Staff Working Papers with number 07-135.

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Date of creation: Feb 2007
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Handle: RePEc:upj:weupjo:07-135

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Related research
Keywords: temporary help disadvantaged welfare welfare-to-work tax credit Hamersma Heinrich

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Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue
I3 - Health, Education, and Welfare - - Welfare and Poverty
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J4 - Labor and Demographic Economics - - Particular Labor Markets

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  1. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
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  2. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Staff Working Papers 99-56, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
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  11. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2005. "Welfare to Temporary Work: Implications for Labor Market Outcomes," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 154-173, December. [Downloadable!] (restricted)
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