[Journal:] Zeitschrift für ArbeitsmarktForschung – Journal for Labour Market Research [ISSN:] 2510-5027 [Volume:] 43 [Year:] 2010 [Issue:] 1 [Pages:] 53-71
In Germany, targeted wage subsidies to employers are an important instrument of active labor market policy. This paper compares the wages of individuals taking up a subsidized job with those of otherwise similar individuals who found an unsubsidized job, combining propensity score matching with a differences-in-differences strategy. The results indicate for the short-run that subsidized jobs are not associated with gains or losses regarding daily wages. Nonetheless, because subsequent employment rates of subsidized persons are higher on average, we find a positive relationship between cumulated wages and subsidization.