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Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes

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  • Sarah Hamersma

    (University of Florida)

  • Carolyn Heinrich

    (University of Wisconsin-Madison)

Abstract

Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies—the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)—create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.

Suggested Citation

  • Sarah Hamersma & Carolyn Heinrich, 2007. "Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes," Upjohn Working Papers and Journal Articles 07-135, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:07-135
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    More about this item

    Keywords

    temporary help; disadvantaged; welfare; welfare-to-work; tax credit; Hamersma; Heinrich;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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