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Evaluating the impact of a well - targeted wage subsidy using administrative data


  • Zsombor Cseres-Gergely

    (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences)

  • Agota Scharle

    (Budapest Institute)

  • Arpad Foldessy

    (University College London)


The paper measures the impact of a wage subsidy for long term unemployed workers, using a large administrative dataset from Hungary. While such subsidies are often promoted as an efficient way to speed up the recovery of the economy or to increase demand for low skilled workers, existing evidence on their employment effects is somewhat inconclusive, especially in the case of transition economies. We examine employment outcomes in various model specifications. Results show a significant impact for men aged over 50, which is driven by the subgroup of those with lower secondary education. The subsidy for jobseekers with at least secondary education and aged over 50 is cost effective for men. We also present some evidence that this is not merely caused by substitution across various sub-groups of jobseekers.

Suggested Citation

  • Zsombor Cseres-Gergely & Agota Scharle & Arpad Foldessy, 2015. "Evaluating the impact of a well - targeted wage subsidy using administrative data," Budapest Working Papers on the Labour Market 1503, Institute of Economics, Centre for Economic and Regional Studies.
  • Handle: RePEc:has:bworkp:1503

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    References listed on IDEAS

    1. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2011. "Comparing the effectiveness of employment subsidies," Labour Economics, Elsevier, vol. 18(2), pages 168-179, April.
    2. 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.
    3. Maarten Goos & Jozef Konings, 2007. "The Impact of Payroll Tax Reductions on Employment and Wages: A Natural Experiment Using Firm Level Data," LICOS Discussion Papers 17807, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. Betcherman, Gordon & Olivas, Karina & Dar, Amit, 2004. "Impacts of active labor market programs : new evidence from evaluations with particular attention to developing and transition countries," Social Protection Discussion Papers and Notes 29142, The World Bank.
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    Cited by:

    1. Svraka, András, 2019. "The Effect of Labour Cost Reduction on Employment of Vulnerable Groups — Evaluation of the Hungarian Job Protection Act," Public Finance Quarterly, Corvinus University of Budapest, vol. 64(1), pages 72-92.
    2. Gabriel Machlica, 2017. "Enhancing skills to boost growth in Hungary," OECD Economics Department Working Papers 1364, OECD Publishing.
    3. Kevin Hollenbeck, 2015. "Promoting Retention or Reemployment of Workers After a Significant Injury or Illness," Mathematica Policy Research Reports 99caa302888a4be68d16d276c, Mathematica Policy Research.

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    More about this item


    wage-subsidy; evaluation; older workers;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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