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Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme

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  • Nabanita Datta Gupta

    ()

  • Mona Larsen

    ()

  • Lars Thomsen

    ()

Abstract

We evaluate the potential of wage subsidy programs for reducing non-employment of the disabled by exploiting a reform of the Danish Flexjob scheme targeted towards employing the long-term (partially) disabled. Firms received a salary reimbursement for all employees granted a Flexjob. We examine whether a change from full to partial reimbursement to governmental units affected the share of Flexjobs allocated to retained (insiders) versus non-employed hirees (outsiders). After the reform, the composition of hires changed substantially in favor of insiders, both in absolute and relative terms. A reduction in subsidies thus leads to a decrease in the hiring of the non-employed disabled. JEL Codes: I38, J14, C21 Copyright Datta Gupta et al.; licensee Springer. 2015

Suggested Citation

  • Nabanita Datta Gupta & Mona Larsen & Lars Thomsen, 2015. "Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
  • Handle: RePEc:spr:izalpo:v:4:y:2015:i:1:p:1-26:10.1186/s40173-015-0036-7
    DOI: 10.1186/s40173-015-0036-7
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    References listed on IDEAS

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    1. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
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    Cited by:

    1. Sergi JimeÌ nez-MartiÌ n & Arnau Juanmarti Mestres & Judit Vall Castello, 2017. "Hiring subsidies for people with disabilities: Do they work?," Policy Papers 2017-11, FEDEA.
    2. repec:cog:socinc:v:6:y:2018:i:1:p:18-28 is not listed on IDEAS

    More about this item

    Keywords

    Disability; Wage subsidies; Non-employment; Difference-in-differences;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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