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Title:Unemployment vouchers versus low-wage subsidies PDF Logo
Authors:Orszag, Jonathan Michael
Snower, Dennis J.
Issue Date:2002
Citation:[Series:] IZA discussion papers [Editor:] Forschungsinstitut zur Zukunft der Arbeit, Bonn [No.:] 537
Series/Report no.:IZA Discussion paper series 537
Abstract:The paper examines the relative effectiveness of two policy proposals in reducing unemployment and working poverty: unemployment vouchers and low-wage subsidies. The unemployment vouchers are targeted exclusively at the unemployed (especially the longterm unemployed) and are provided only for a limited period of time. The low-wage subsidies, on the other hand, are granted to all low-wage earners regardless of their employment history and are of limitless duration. Our analysis indicates that the relative effectiveness of the two policies depends on workers? prospective wage growth. The more upwardly mobile workers are (i.e. the more their wages rise with employment duration), the more effective will unemployment vouchers be relative to low-wage subsidies. Conversely, the greater the danger that workers come to be trapped in dead-end jobs with flat wage profiles, the more effective will low-wage subsidies be relative to unemployment vouchers.
Subjects:unemployment , poverty , wages , employment , vouchers , subsidies , inequality
JEL:J68
J38
J23
J32
J64
J65
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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