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dc.contributor.authorOskamp, Franken_US
dc.contributor.authorSnower, Dennis J.en_US
dc.date.accessioned2009-01-28T14:36:40Z-
dc.date.available2009-01-28T14:36:40Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/3874-
dc.description.abstractWe explore the far-reaching implications of low-wage subsidies on aggregate employment. Low-wage subsidies have three important effects. First, they promote employment of unskilled workers (who tend to be the ones who earn low wages). Second, by raising the payoff of unskilled work relative to skilled work, low-wage subsidies reduce the incentive to become skilled, so that there are more unskilled workers associated with a relatively low employment rate. Third, the government budget constraint has to be taken into account, which is supposed to cause an additional tax burden for the skilled workers. This amplifies the negative effect of low-wage subsidies on the incentive to acquire human capital. Thus, the first effect on the one hand and the second and third effect on the other hand pull in opposite directions in terms of employment. This paper presents a theoretical model of the labor market in which these effects can be analyzed. We then calibrate the model with respect to the German labor market to shed light on the relative strengths of these effects and thereby assess the degree to which low-wage subsidies encourage or discourage employment.en_US
dc.language.isoengen_US
dc.publisherKiel Institute for the World Economy (IfW) Kielen_US
dc.relation.ispartofseriesKieler Arbeitspapiere 1292en_US
dc.subject.jelI29en_US
dc.subject.jelJ38en_US
dc.subject.jelJ21en_US
dc.subject.jelJ24en_US
dc.subject.jelJ31en_US
dc.subject.ddc330-
dc.subject.keywordLow-wage subsidiesen_US
dc.subject.keywordEmployment-
dc.subject.keywordUnemployment-
dc.subject.keywordSkill acquisition-
dc.subject.keywordTraining incentives-
dc.subject.stwLohnsubventionen_US
dc.subject.stwNiedriglohnen_US
dc.subject.stwWirtschaftspolitische Wirkungsanalyseen_US
dc.subject.stwUngelernte Arbeitskräfteen_US
dc.subject.stwBeschäftigungseffekten_US
dc.subject.stwBildungsverhaltenen_US
dc.subject.stwÖkonomischer Anreizen_US
dc.subject.stwBildungsinvestitionen_US
dc.subject.stwQualifikationen_US
dc.subject.stwTheorieen_US
dc.subject.stwDeutschlanden_US
dc.titleThe effect of low-wage subsidies on skills and employmenten_US
dc.typeWorking Paperen_US
dc.identifier.ppn517476533en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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