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Getting the unemployed back to work: the role of targeted wage subsidies

  • Brian Bell

    (Institute for Fiscal Studies)

  • Richard Blundell

    ()

    (Institute for Fiscal Studies and IFS and UCL)

  • John Van Reenen

    (Institute for Fiscal Studies)

This paper examines alternative approaches to wage subsidy programmes. It does this in the context of a recent active labour market reform for the young unemployed in Britain. This ?ew Deal?reform and the characteristics of the target group are examined in detail. We discuss theoretical considerations, survey the existing empirical evidence and propose two strategies for evaluation. The first suggests an expost ?rend adjusted di?rence in di?rence' estimator. The second, relates to a model based ex-ante evaluation. We present the conditions for each to provide a reliable evaluation and ? some of the crucial parameters using data from the British Labour Force Survey. We stress that the success of this type of labour market programmes hinge on dynamic aspects of the youth labour market, in particular the pay-off to experience and training.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W99/12.

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Length: 53 pp.
Date of creation: 01 Apr 1999
Date of revision:
Handle: RePEc:ifs:ifsewp:99/12
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  9. James J. Heckman & Jeffrey A. Smith & Christopher Taber, 1996. "What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program," NBER Working Papers 5535, National Bureau of Economic Research, Inc.
  10. 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.
  11. van Ours, J.C. & van den Berg, G.J., 1994. "Unemployment Dynamics and Duration Dependence in France, the Netherlands and the UK," Other publications TiSEM 941b66a3-a3a7-4182-9d31-e, Tilburg University, School of Economics and Management.
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  13. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
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  15. J Richardson, 1997. "Wage Subsidies for the Long Term Unemployed: A Search Theoretic Analysis," CEP Discussion Papers dp0347, Centre for Economic Performance, LSE.
  16. David Card & Philip Robins, 1996. "Do Financial Incentives Encourage Welfare Recipients to Work? Early Findings from the Canadian Self Sufficiency Project," Working Papers 738, Princeton University, Department of Economics, Industrial Relations Section..
  17. Greenhalgh, Christine & Stewart, Mark, 1987. "The Effects and Determinants of Training," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(2), pages 171-90, May.
  18. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, December.
  19. David Card & Philip K. Robins, 1996. "Do Financial Incentives Encourage Welfare Recipients to Work? Evidence from a Randomized Evaluation of the Self-Sufficiency Project," NBER Working Papers 5701, National Bureau of Economic Research, Inc.
  20. Stephen Machin & Alan Manning, 1998. "The causes and consequences of long-term unemployment in Europe," LSE Research Online Documents on Economics 20255, London School of Economics and Political Science, LSE Library.
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  24. Gary Burtless, 1985. "Are Targeted Wage Subsidies Harmful? Evidence from a Wage Voucher Experiment," ILR Review, Cornell University, ILR School, vol. 39(1), pages 105-114, October.
  25. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
  26. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-30, September.
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  28. Stacy Dickert & Scott Houser & John Karl Scholz, 1995. "The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation," NBER Chapters, in: Tax Policy and the Economy, Volume 9, pages 1-50 National Bureau of Economic Research, Inc.
  29. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
  30. Peter Dolton & Gerald Makepeace & John Treble, 1994. "Public- and Private-Sector Training of Young People in Britain," NBER Chapters, in: Training and the Private Sector: International Comparisons, pages 261-282 National Bureau of Economic Research, Inc.
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