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The effects of an employer subsidy on employment outcomes: A study of the work opportunity and welfare-to-work tax credits

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  • Sarah Hamersma

    (University of Florida)

Abstract

Employer subsidies such as the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Tax Credit (WtW) are designed to encourage employment by partially reimbursing employers for wages paid to certain welfare recipients and other disadvantaged workers. In this paper, I examine the effects of these subsidies on employment, wages, and job tenure using unique administrative data from Wisconsin. My ability to precisely identify the subsidy-certified workers allows me to distinguish the effects of program participation from mere eligibility. Using propensity score matching estimation, I find some evidence of short-term improvements in labor market outcomes, but little evidence of sustained benefits. © 2008 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:jpamgt:v:27:y:2008:i:3:p:498-520
    DOI: 10.1002/pam.20354
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    References listed on IDEAS

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