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A policy for the jobless youth in South Africa

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  • Ebrahim, Amina
  • Pirttilä, Jukka

Abstract

This paper uses survey and tax administrative data to analyse the effects of a sizeable employer-borne payroll tax credit for young, low-wage workers in South Africa. We find fairly limited impacts of the wage subsidy on the employment of young, low-wage workers relative to two comparison groups: slightly older, low-wage workers and slightly higher-paid, young workers. We find evidence of increases in low-wage youth entry into employment, but these are too small to affect overall employment. However, the female employment rate has increased, and unemployment among women has dropped because of the policy. We find evidence to suggest that the policy has led to a rise in earnings, particularly for men and those earning around the maximum subsidy value.

Suggested Citation

  • Ebrahim, Amina & Pirttilä, Jukka, 2025. "A policy for the jobless youth in South Africa," Journal of Development Economics, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:deveco:v:172:y:2025:i:c:s0304387824001433
    DOI: 10.1016/j.jdeveco.2024.103394
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    References listed on IDEAS

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    1. Pierre Cahuc & Stéphane Carcillo & Thomas Le Barbanchon, 2019. "The Effectiveness of Hiring Credits," SciencePo Working papers hal-03391893, HAL.
    2. Saez, Emmanuel & Schoefer, Benjamin & Seim, David, 2021. "Hysteresis from employer subsidies," Journal of Public Economics, Elsevier, vol. 200(C).
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    13. Kluve, Jochen & Puerto, Susana & Robalino, David & Romero, Jose M. & Rother, Friederike & Stöterau, Jonathan & Weidenkaff, Felix & Witte, Marc, 2019. "Do youth employment programs improve labor market outcomes? A quantitative review," World Development, Elsevier, vol. 114(C), pages 237-253.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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