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Impact of the Additional 6-Point Regional Insurance Premium Subsidy on Employment and Formality

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  • Muhammet Enes Çirakli

Abstract

This study examines the impact of a subsidy program that had been put into practice since 2013 on employment and the rate of formality. According to this program, labor costs were reduced by subsidizing social security contribution rates in cities with low socioeconomic development status. Thus, some of the cities/regions in Türkiye constituted a potential experimental group and some of them formed a potential control group. The impact of the regional subsidy on the labor market was estimated using the Household Labor Force Survey annual datasets and the difference-in-differences method. The results of the analysis show that the regional subsidy program on non-agricultural employment was positive and statistically significant. The positive effect on non-agricultural employment was observed in the regression results for men and women.

Suggested Citation

  • Muhammet Enes Çirakli, 2023. "Impact of the Additional 6-Point Regional Insurance Premium Subsidy on Employment and Formality," Working Papers 2302, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2302
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2023/23-02
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    More about this item

    Keywords

    Employment; Employment subsidies; Difference-in-differences;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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