South Africa's Employment Tax Incentive, launched in 2014, aimed to address low youth employment by reducing the cost of hiring young workers. We make use of anonymized tax administrative data from the 2012-2015 tax years to examine the effect of the Incentive on youth employment. We match firms claiming the subsidy with similar firms not claiming the subsidy and observe their hiring behaviour before and after the implementation of the policy. We find no statistically significant impact on youth employment on average. We see a positive and statistically significant effect on youth and non-youth employment in firms with fewer than 200 employees. However, we cannot distinguish whether the increase is due to the policy or to employment growth within the firm.
wage subsidy South Africa difference-in-differences youth unemployment Employment Tax Incentive