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The Employment and Earnings Impacts of the Targeted Jobs Tax Credit

  • Kevin Hollenbeck

    ()

    (W.E. Upjohn Institute for Employment Research)

  • Richard J. Willke

    (American Medical Association)

The Targeted Jobs Tax Credit (TJTC) is intended to stimulate the employment of individuals who are members of certain groups of the labor force by providing a wage subsidy (in the form of a tax credit) to employers of recently-hired eligible workers. This intervention into the labor market has direct and indirect earnings and employment consequences for both eligible and ineligible individuals. The paper evaluates the impacts of TJTC by using a treatment and comparison group methodology. Corrections for nonrandom selection are undertaken. The primary sources of data are state quarterly wage record data from the Unemployment Insurance system and the Employment Service Automated Reporting System (ESARS). The results indicate that the availability and usage of TJTC enhances outcomes for nonwhite male youth (both eligible and ineligible), but is stigmatizing for eligible individuals from other race/sex groups, who appear to be slightly worse off because of the program than their ineligible counterparts. Obtaining a voucher increases employment and wages, but it appears as if selection effects are responsible. Importantly, the improved outcomes are not accompanied by displacement effects. Finally, being certified results in increased wages, but higher turnover and lower total employment.

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File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1019&context=up_workingpapers
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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 91-07.

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Date of creation: Feb 1991
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Handle: RePEc:upj:weupjo:91-07
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  1. Gary Burtless, 1985. "Are targeted wage subsidies harmful? Evidence from a wage voucher experiment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(1), pages 105-114, October.
  2. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
  3. Kiefer, Nicholas M, 1979. "Population Heterogeneity and Inference from Panel Data on the Effects of Vocational Education," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S213-26, October.
  4. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
  5. Howard S. Bloom, 1984. "Estimating the Effect of Job-Training Programs, Using Longitudinal Data: Ashenfelter's Findings Reconsidered," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 544-556.
  6. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-60, November.
  7. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  8. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  9. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-33, June.
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