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Conny Wunsch - One of the best experts on this subject based on the ideXlab platform.
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Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies?
German Economic Review, 2015Co-Authors: Benjamin Schünemann, Michael Lechner, Conny WunschAbstract:We evaluate a Wage subsidy program that is targeted at long-term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies conducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availability of the subsidy on labor market outcomes of the target group. Even though our analysis lacks some statistical power, our findings do not support the substantial positive effects obtained from matching studies. As our approach does not require observability of all drivers of selection, previous empirical studies justifying government expenditures on Wage Subsidies based on matching methods should be reconsidered.
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Do Long‐Term Unemployed Workers Benefit from Targeted Wage Subsidies?
German Economic Review, 2015Co-Authors: Benjamin Schünemann, Michael Lechner, Conny WunschAbstract:Abstract We evaluate a Wage subsidy program that is targeted at long-term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies conducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availability of the subsidy on labor market outcomes of the target group. Even though our analysis lacks some statistical power, our findings do not support the substantial positive effects obtained from matching studies. As our approach does not require observability of all drivers of selection, previous empirical studies justifying government expenditures on Wage Subsidies based on matching methods should be reconsidered.
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do long term unemployed workers benefit from targeted Wage Subsidies
German Economic Review, 2015Co-Authors: Benjamin Schünemann, Michael Lechner, Conny WunschAbstract:We evaluate a Wage subsidy program that is targeted at long-term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies conducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availabilityof the subsidy on labor market outcomes of the target group.
Richard Portes - One of the best experts on this subject based on the ideXlab platform.
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Eastern Germany since unification: Wage Subsidies remain a better way
Economics of Transition, 1993Co-Authors: David Begg, Richard PortesAbstract:In Spring 1991, we argued that the centrepiece of German policy towards unification should be a universal, temporary Wage subsidy in Eastern Germany and the elimination of all other Subsidies. Subsequent events have strengthened the analytical case for and practical importance of this policy. This paper describes the performance of the Eastern German economy since unification, the reasons behind it, and the principal policy responses. It then identifies the specific market failures attributable to unification and shows that the various current policy interventions are poorly targeted. Finally, the paper sets out our proposal, explains why it minimizes distortions, and deals with common objections to a Wage subsidy.
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eastern germany since unification Wage Subsidies remain a better way
Economics of Transition, 1993Co-Authors: David Begg, Richard PortesAbstract:German unification, according to Bismarck, was achieved by blood and iron. Over a century later, the reunification of Germany in 1990 was secured without war, but blood has again been shed: the economic cost of unification has exceeded all expectations. In this chapter we argue, that the policy response to unification has been inappropriate, and hence unnecessarily expensive; the adoption of a universal, temporary Wage subsidy in Eastern Germany would have been the preferred solution (Begg and Portes (1991).
Gesine Stephan - One of the best experts on this subject based on the ideXlab platform.
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Which firms use targeted Wage Subsidies? An empirical note for Germany
Journal for Labour Market Research, 2014Co-Authors: Lutz Bellmann, Gesine StephanAbstract:In Germany, temporary Wage Subsidies (Eingliederungszuschusse) can be granted to employers if they hire workers with obstacles to placement. Based on the 2003, 2005, 2007 and 2009 waves of the IAB Establishment Panel, this paper looks into the following questions: Is there a connection between the use of targeted Wage Subsidies and certain structural characteristics of the establishment, such as establishment size, industry and employment structure? Is the labor turnover of establishments that make use of Wage Subsidies higher than that of similar establishments that do not? Do establishments that utilize targeted Wage Subsidies also make use of other active labor market programs (e.g. work opportunities) to a disproportionate degree? On the whole, the empirical findings confirm that establishment structures are important for the decisions of firms to make use of targeted Wage Subsidies.
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The effectiveness of targeted Wage Subsidies for hard-to-place workers
Applied Economics, 2011Co-Authors: Ursula Jaenichen, Gesine StephanAbstract:International audienceTargeted Wage Subsidies paid to employers are an important element of active labour market policies in Germany. This paper uses propensity score matching to investigate their effect on the employment and unemployment rates of subsidised hard-to-place workers. In a first scenario, we estimate the average treatment effect of a subsidy on previously unemployed individuals. A second scenario analyses the effects of a subsidy on employment probabilities conditional on taking-up employment. The third scenario investigates the additional effect of a subsidy on individuals, who have participated in a short-term training measure beforehand. Summing up and in line with the literature, the results show that Subsidies have a favourable effect on the employment prospects of participants
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Employer Wage Subsidies and Wages in Germany: empirical evidence from individual data
Zeitschrift für ArbeitsmarktForschung, 2010Co-Authors: Gesine StephanAbstract: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.
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The Effectiveness of Targeted Wage Subsidies for Hard-to-Place Workers
Applied Economics, 2009Co-Authors: Ursula Jaenichen, Gesine StephanAbstract:Targeted Wage Subsidies paid to employers are an important element of active labour market policies in Germany. This paper uses propensity score matching to investigate their effect on the employment and unemployment rates of subsidised hard-to-place workers. In a first scenario, we estimate the average treatment effect of a subsidy on previously unemployed individuals. A second scenario analyses the effects of a subsidy on employment probabilities conditional on taking-up employment. The third scenario investigates the additional effect of a subsidy on individuals, who have participated in a short-term training measure beforehand. Summing up and in line with the literature, the results show that Subsidies have a favourable effect on the employment prospects of participants.
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Employer Wage Subsidies and Wages in Germany : some evidence from individual data
2009Co-Authors: Gesine StephanAbstract:"In Germany, targeted Wage Subsidies to employers are an important instrument of active labor market policy. This paper utilizes process generated data of the German Public Employment Service to compare the Wages of individuals taking up a subsidized job with those of otherwise similar individuals who found an unsubsidized job. The results indicate that subsidized jobs are not associated with gains or losses regarding daily Wages, which might be contributed to Wage setting within the German system of industrial relations. Nonetheless, because subsequent employment rates of subsidized persons are higher on average, we find a positive relationship between cumulated Wages and subsidization." (Author's abstract, IAB-Doku) ((en))
Viktor Steiner - One of the best experts on this subject based on the ideXlab platform.
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Beschäftigungswirkungen von Lohnsubventionen und Mindestlöhnen : zur Reform des Niedriglohnsektors in Deutschland (Employment effects of Wage Subsidies and minimum Wages : the reform of the low-Wage labor market in Germany)
2013Co-Authors: Kai-uwe Müller, Viktor SteinerAbstract:"In this contribution employment effects of Wage Subsidies and a minimum Wage are analyzed for Germany. Existing studies for the construction sector and simulations of a statutory minimum Wage unanimously point to employment losses of a general minimum Wage for Germany. The magnitude of the negative employment effects depends on the minimum Wage level, reactions on the goods market and the coverage of the minimum Wage (inclusion of apprentices, marginally employed). For a minimum Wage of 7.5 EURO per hour we estimate a total employment loss of 220,000 individuals, mostly in jobs not covered by social security. Evaluations of existing Wage Subsidies in Germany find only minor labor supply incentives. Here, the revenue-neutral 'employment bonus' which subsidizes small hourly Wages and not low Wage incomes is considered. The 'employment bonus' would induce an increased labor supply of 80,000 persons at the extensive and 420,000 full-time equivalents at the intensive margin. If an employee-oriented Wage subsidy is combined with a statutory minimum Wage its labor supply effects were rendered ineffective. Simulation results show that in this case employer-oriented Wage Subsidies could compensate higher Wage costs and partially diminish employment losses induced by the minimum." (Author's abstract, IAB-Doku) ((en))
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Wage Subsidies, work incentives, and the reform of the Austrian welfare system
Empirica, 2013Co-Authors: Viktor Steiner, Florian WakolbingerAbstract:We analyze the employment and income effects of a needs-based minimum benefit system (“ Bedarfsorientierte Mindestsicherung ”) which has recently been introduced in Austria. The aim of this reform was to reduce poverty as well as to increase work incentives for recipients of social assistance. On the basis of a behavioral microsimulation model we show that this new system slightly increases employment but reduces incomes for the poorest households remaining unemployed. As an alternative, we analyze a budgetary neutral reform proposal which reduces financial incentives for marginal employment and provides a Wage subsidy rewarding working longer hours. This alternative reform would yield larger positive employment effects, but more households would suffer from income losses. Overall, income inequality and poverty are affected little, however, both under the new social welfare system and the alternative reform proposal.
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Wage Subsidies, Work Incentives, and the Reform of the Austrian Welfare System
Empirica, 2013Co-Authors: Viktor Steiner, Florian WakolbingerAbstract:We analyze the labor supply and income effects of a needs-based minimum benefit system ("Bedarfsorientierte Mindestsicherung") to be introduced in Austria by the end of this/beginning of next year. The aim of this reform is to reduce poverty as well as increasing employment rates of recipients of social assistance. On the basis of a behavioral microsimulation model we show that this new system will slightly increase incomes for the poorest households and slightly reduce labor supply due to the generous allowances for marginal employment under the current and the planned regulations of unemployment assistance. As an alternative, we analyze a reform proposal which reduces financial incentives for marginal employment not covered by social security, and rewards working longer hours by a Wage subsidy. Although this alternative reform would yield modest positive labor supply effects, a relatively large number of households would suffer income losses.
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beschaftigungseffekte und fiskalische kosten von lohnsubventionen im niedriglohnbereich employment effects and fiscal costs of Wage Subsidies in the low Wage sector
Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, 2003Co-Authors: Hermann Buslei, Viktor SteinerAbstract:"In this paper the basic manifestations and effects of Wage Subsidies are outlined and the probable employment effects of the existing Subsidies are shown. In addition to this the paper analyses what employment effects and fiscal costs would result from proposed changes to the existing forms of subsidy. Both Wage Subsidies to firms and Wage-related transfers to employees in the form of improved possibilities of earning in addition to receiving social assistance or unemployment benefit are considered. In view of the considerable amount of funding needed per additional employee, Wage Subsidies to firms in the form of subsidising the social security contributions or a degressively graded subsidy of hourly Wages in the entire low-Wage sector do not appear to be justifiable alone with the aim of increasing employment. No larger growths in employment are to be expected from improved possibilities of earning in addition to receiving social assistance or unemployment benefit, either." (Author's abstract, IAB-Doku) ((en))
Renate Neubaumer - One of the best experts on this subject based on the ideXlab platform.
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bringing the unemployed back to work in germany training programs or Wage Subsidies
International Journal of Manpower, 2012Co-Authors: Renate NeubaumerAbstract:Purpose – The purpose of this paper is to theoretically and empirically investigate the relative effects of Wage Subsidies and further vocational training on employment prospects.Design/methodology/approach – The paper adopts a theoretical approach that discusses the effects of two major active labor market programs; empirical test using a large administrative data set from Germany and statistical matching techniques.Findings – Previously subsidized individuals and trained individuals who found a job immediately afterwards have the same employment rates.Practical implications – Firms value training on a subsidized job as much as formal training programs.Originality/value – The paper presents a model that draws attention to the role of hiring decisions of firms and to the formation of human capital by training programs and by training on subsidized jobs; estimation of relative average treatment effects on the differentially treated, i.e. participants of two active labor market programs; and comparisons not...
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Can training programs or rather Wage Subsidies bring the unemployed back to work? A theoretical and empirical investigation for Germany
2010Co-Authors: Renate NeubaumerAbstract:Our paper investigates the relative effects of Wage Subsidies and further vocational training on the subsequent employment prospects of previously unemployed program participants. First, we outline a theoretical approach based on a firm's hiring decision. For the relative effectiveness of both labor market programs the assumption concerning the formation of human capital is crucial and leads to competing hypotheses for the medium and long term. On the assumption that Wage Subsidies have no effect on human capital they improve individuals’ employment prospects less than training programs. Contrariwise, on the assumption that the formation of human capital on subsidized jobs equals that by formal training subsidization has the same employment effect as a training program. Second, we test the two hypotheses empirically, using a large administrative data set from Germany and statistical matching techniques. Our treatment groups consist of unemployed persons taking up subsidized employment or entering a further vocational training program, respectively, during March 2003. To exclude unemployment after program end we estimate the effect of keeping a subsidized job versus participating in training and taking up a job immediately afterwards. The results strongly support the latter of our competing hypotheses: Previously subsidized individuals and trained individuals who found a job immediately afterwards have the same employment rates. This leads to the conclusion that firms value training on a subsidized job as much as formal training programs.
