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

Author

Listed:
  • 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)

Abstract

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

    as
    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. Dubin, Jeffrey A. & Rivers, Douglas, 1993. "Experimental estimates of the impact of wage subsidies," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 219-242, March.
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    Cited by:

    1. Svraka András, 2019. "The Effect of Labour Cost Reduction on Employment of Vulnerable Groups," Public Finance Quarterly, State Audit Office of Hungary, 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

    Keywords

    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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