Prospective Analysis of a Wage Subsidy for Cape Town Youth

James Levinsohn and Todd Pugatch

No 17248, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recognizing that a credible estimate of a wage subsidy's impact requires a model of the labor market that itself generates high unemployment in equilibrium, we estimate a structural search model that incorporates both observed heterogeneity and measurement error in wages. Using the model to examine the impact of a wage subsidy, we find that a R1000/month wage subsidy paid to employers leads to an increase of R660 in mean accepted wages and a decrease of 15 percentage points in the share of youth experiencing long-term unemployment.

JEL-codes: J64 J68 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-dev, nep-lab and nep-lma
Note: LS
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Citations: View citations in EconPapers (1)

Published as Levinsohn, James & Pugatch, Todd, 2014. "Prospective analysis of a wage subsidy for Cape Town youth," Journal of Development Economics, Elsevier, vol. 108(C), pages 169-183.

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