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How Targeted is Targeted Tax Relief? Evidence from the Unemployment Insurance Youth Hires Program

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  • Webb, Matthew
  • Sweetman, Arthur
  • Warman, Casey

Abstract

Targeted employment subsidy programs are commonly employed by governments. This study examines one such initiative that rebated unemployment insurance premi- ums to employers with net increases in insurable earnings for youth aged 18 to 24. In each of two datasets, statistically and economically signficant impacts on employment are observed for the targeted age group relative to older age groups. However, neither dataset exhibits a concurrent change in aggregate unemployment; instead there is a reduction in those not in the labour force. Oddly, no program impacts are observed for females and all of the effects involve only males. Notably, evidence of displacement -- substitution away from slightly older non-subsidized workers towards the younger subsidized group -- is observed. Although modest, these spillovers suggest that the aggregate impact of the program is less than that observed for the targeted group.

Suggested Citation

  • Webb, Matthew & Sweetman, Arthur & Warman, Casey, 2014. "How Targeted is Targeted Tax Relief? Evidence from the Unemployment Insurance Youth Hires Program," Queen's Economics Department Working Papers 274618, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274618
    DOI: 10.22004/ag.econ.274618
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    Cited by:

    1. Jochen Kluve & Susana Puerto & David Robalino & Jose Manuel Romero & Friederike Rother & Jonathan Stöterau & Felix Weidenkaff & Marc Witte, 2017. "Interventions to improve the labour market outcomes of youth: A systematic review of training, entrepreneurship promotion, employment services and subsidized employment interventions," Campbell Systematic Reviews, John Wiley & Sons, vol. 13(1), pages 1-288.

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    More about this item

    Keywords

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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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