Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/3874 
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dc.contributor.authorOskamp, Franken
dc.contributor.authorSnower, Dennis J.en
dc.date.accessioned2009-01-28T14:36:40Z-
dc.date.available2009-01-28T14:36:40Z-
dc.date.issued2006-
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
dc.language.isoengen
dc.publisher|aKiel Institute for the World Economy (IfW) |cKielen
dc.relation.ispartofseries|aKiel Working Paper |x1292en
dc.subject.jelI29en
dc.subject.jelJ38en
dc.subject.jelJ21en
dc.subject.jelJ24en
dc.subject.jelJ31en
dc.subject.ddc330en
dc.subject.keywordEmploymenten
dc.subject.keywordUnemploymenten
dc.subject.keywordSkill acquisitionen
dc.subject.keywordTraining incentivesen
dc.subject.keywordLow-wage subsidiesen
dc.subject.stwLohnsubventionen
dc.subject.stwNiedriglohnen
dc.subject.stwWirtschaftspolitische Wirkungsanalyseen
dc.subject.stwUngelernte Arbeitskräfteen
dc.subject.stwBeschäftigungseffekten
dc.subject.stwBildungsverhaltenen
dc.subject.stwÖkonomischer Anreizen
dc.subject.stwBildungsinvestitionen
dc.subject.stwQualifikationen
dc.subject.stwTheorieen
dc.subject.stwDeutschlanden
dc.titleThe effect of low-wage subsidies on skills and employment-
dc.typeWorking Paperen
dc.identifier.ppn517476533en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:ifwkwp:1292en

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