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Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria

Author

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  • Rainer Eppel

    (WIFO)

  • Helmut Mahringer

    (WIFO)

Abstract

We construct two matching scenarios to estimate the long-term impact of targeted wage subsidies in Austria on the subsequent labour market integration of previously unemployed participants. Even if substantial dead-weight loss is taken into account, the treated experience a significant increase in employment in the seven years from program start and spend considerably less time in unemployment and out of the labour force than similar nonparticipants. The effect increases with age and with pre-treatment unemployment duration. It is particularly large for older workers and the long-term unemployed. Hence, wage subsidies are particularly effective in helping disadvantaged unemployed individuals back into employment. Cumulated earnings rise significantly for the treated as a result of their relative increase in employment. Participation in the program does, however, not exert a positive influence on the quality of jobs in terms of the average wage level.

Suggested Citation

  • Rainer Eppel & Helmut Mahringer, 2013. "Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria," WIFO Working Papers 456, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2013:i:456
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    References listed on IDEAS

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    Cited by:

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    2. Angela Köppl & Simon Loretz & Ina Meyer & Margit Schratzenstaller, 2019. "Effekte eines ermäßigten Mehrwertsteuersatzes für Reparaturdienstleistungen," WIFO Studies, WIFO, number 61957, February.
    3. Rainer Eppel & Helmut Mahringer & Petra Sauer, 2017. "Österreich 2025 – Arbeitslosigkeit und die Rolle der aktiven Arbeitsmarktpolitik," WIFO Monatsberichte (monthly reports), WIFO, vol. 90(6), pages 493-505, June.
    4. Rainer Eppel, 2014. "The Effects of a Job Creation Scheme. Evidence from Regional Variation in Programme Capacities," WIFO Working Papers 489, WIFO.
    5. Rainer Eppel & Ulrike Famira-Mühlberger & Thomas Horvath & Ulrike Huemer & Helmut Mahringer, 2018. "Anstieg und Verfestigung der Arbeitslosigkeit seit der Wirtschaftskrise. Entwicklung, Ursachen und Handlungsansätze," WIFO Studies, WIFO, number 62227, February.

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