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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.

Suggested Citation

  • Kevin Hollenbeck & Richard J. Willke, 1991. "The Employment and Earnings Impacts of the Targeted Jobs Tax Credit," Upjohn Working Papers and Journal Articles 91-07, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:91-07

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    References listed on IDEAS

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    Cited by:

    1. Raphael W. Bostic & Allen C. Prohofsky, 2006. "Enterprise Zones and Individual Welfare: A Case Study of California," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 175-203.
    2. Edward C. Lorenz, 1995. "TJTC and the promise and reality of redistributive vouchering and tax credit policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(2), pages 270-290.
    3. John Van Reenen, 2004. "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 461-496 National Bureau of Economic Research, Inc.
    4. Matthew Webb & Arthur Sweetman & Casey Warman, 2014. "How Targeted is Targeted Tax Relief? Evidence from the Unemployment Insurance Youth Hires Program," Working Papers 1298, Queen's University, Department of Economics.
    5. repec:sae:ilrrev:v:70:y:2017:i:5:p:1111-1145 is not listed on IDEAS
    6. Benjamin Schünemann & Michael Lechner & Conny Wunsch, 2015. "Do Long-Term Unemployed Workers Benefit from Targeted Wage Subsidies?," German Economic Review, Verein für Socialpolitik, vol. 16(1), pages 43-64, February.
    7. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. David Neumark & Diego Grijalva, 2013. "The Employment Effects of State Hiring Credits During and After the Great Recession," NBER Working Papers 18928, National Bureau of Economic Research, Inc.
    9. Sarah Hamersma & Carolyn Heinrich, 2008. "Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 1123-1148, April.
    10. Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, January.
    11. Gunderson, Jill Marie & Hotchkiss, Julie L., 2007. "Job Separation Behavior of WOTC Workers: Results from a Unique Case Study," MPRA Paper 44801, University Library of Munich, Germany.
    12. Harry J. Holzer, 1994. "Black employment problems: New evidence, old questions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(4), pages 699-722.
    13. Christine Ryan & John Wilson & William Fulton, 2003. "The Impact of Urban Growth Boundaries on Future Urbanization," Working Paper 8610, USC Lusk Center for Real Estate.
    14. David Neumark & Diego Grijalva, 2017. "The Employment Effects of State Hiring Credits," ILR Review, Cornell University, ILR School, vol. 70(5), pages 1111-1145, October.
    15. Stacy Dickert-Conlin & Douglas Holtz-Eakin, 1999. "Helping the Working Poor: Employer- vs. Employee-Based Subsidies," Center for Policy Research Policy Briefs 14, Center for Policy Research, Maxwell School, Syracuse University.
    16. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    17. Christopher J. O'Leary, 2017. "Evaluating Public Employment Programs with Field Experiments: A Survey of American Evidence," Upjohn Working Papers and Journal Articles 17-279, W.E. Upjohn Institute for Employment Research.
    18. Stacy Dickert-Conlin & Douglas Holtz-Eakin, 1999. "Employee-Based versus Employer-Based Subsidies to Low-Wage Workers: A Public Finance Perspective," JCPR Working Papers 79, Northwestern University/University of Chicago Joint Center for Poverty Research.

    More about this item


    targeted; tax; job; credit; employment; earnings; Hollenbeck; Willke;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers


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