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Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies

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  • Schuenemann, Benjamin

    ()

  • Lechner, Michael

    ()

  • Wunsch, Conny

    ()

Abstract

Wage subsidies are often suggested as a particularly effective policy to improve labor market chances of economically disadvantaged groups. We empirically evaluate an employer-side wage subsidy scheme targeted at the long-term unemployed in Germany. Based on program regulations and a large data set we estimate the impact of program existence locally at the eligibility threshold using an RDD framework in differences. The results suggest no significant effect of the subsidy on exit rates out of unemployment or employment stability. Employment rates up to three years after eligibility show no significant improvement. In conclusion, our findings are in contrast to previous empirical results justifying such policies.

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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1126.

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Length: 30 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:usg:econwp:2011:26

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Keywords: Wage subsidy; Long-term unemployment; Regression discontinuity;

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References

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Cited by:
  1. Michael Lechner & Conny Wunsch & Patrycja Scioch, 2013. "Do Firms Benefit from Active Labour Market Policies?," CESifo Working Paper Series 4392, CESifo Group Munich.
  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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