Who Cleans My House If the Government Pays? Disadvantaged Labor Market Groups in the Tax-Subsidized Domestic Service Sector

Johanna Rickne

No 171, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the labor market. I study Sweden, where a 50% tax deduction on labor costs for domestic services was introduced in 2007. I use detailed administrative data to report the shares of three disadvantaged groups among small business owners and employees in tax-subsidized firms. I then compare these shares to all private firms and to firms in two industrial subsectors with a predominance of elementary occupations. I find that the shares of refugees and long-term unemployed are of similar sizes in the subsidized firms as in the private sector as a whole. For the third group—people with a low level of education—I find a larger share in the subsidized firms compared to the average private firm, but a smaller share compared to the other industries with elementary occupations. An extended analysis suggests that labor immigration to the subsidized sector from other EU countries may have crowded out the disadvantaged groups. EU immigrants operate half of all subsidized firms in Sweden's largest cities and employ mainly other EU immigrants in their businesses.

Keywords: domestic services; tax deduction; employment; refugee immigrants (search for similar items in EconPapers)
JEL-codes: H2 J21 J23 J61 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021-01
New Economics Papers: this item is included in nep-bec, nep-eur, nep-lma and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://docs.iza.org/pp171.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izapps:pp171

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Policy Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().