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IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA) >
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http://hdl.handle.net/10419/4115
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| Title: | | Comparing the effectiveness of employment subsidies  |
| Authors: | | Brown, Alessio J. G. Merkl, Christian Snower, Dennis J. |
| Issue Date: | | 2007 |
| Citation: | | [Series:] IZA discussion papers [Editor:] Forschungsinstitut zur Zukunft der Arbeit, Bonn [No.:] 2835 |
| Series/Report no.: | | IZA Discussion paper series 2835 |
| Abstract: | | This paper analyses theoretically and empirically how employment subsidies should be targeted. We contrast measures involving targeting workers with low incomes/abilities and targeting the unemployed under the criteria of approximate welfare efficiency (AWE). Thereby we can identify policies that (a) improve employment and welfare, (b) do not raise earnings inequality and (c) are self-financing. We construct a microfounded, dynamic model of hiring and separations and calibrate it with German data. The calibration shows that hiring vouchers can be AWE, while low-wage subsidies do not satisfy AWE. Furthermore, hiring vouchers targeted at the long-term unemployed are more effective than those targeted at low-ability workers. |
| Subjects: | | Low wage subsidy Hiring voucher Targeting Employment Unemployment Duration Self-financing |
| JEL: | | J23 J68 J38 J64 J24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economists Online IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA) Publikationen von Forscherinnen und Forschern des IfW
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