Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme

Nabanita Datta Gupta, Mona Larsen () and Lars Thomsen ()

IZA Journal of Labor Policy, 2015, vol. 4, issue 1, 1-26

Abstract: We evaluate the potential of wage subsidy programs for reducing non-employment of the disabled by exploiting a reform of the Danish Flexjob scheme targeted towards employing the long-term (partially) disabled. Firms received a salary reimbursement for all employees granted a Flexjob. We examine whether a change from full to partial reimbursement to governmental units affected the share of Flexjobs allocated to retained (insiders) versus non-employed hirees (outsiders). After the reform, the composition of hires changed substantially in favor of insiders, both in absolute and relative terms. A reduction in subsidies thus leads to a decrease in the hiring of the non-employed disabled. JEL Codes: I38, J14, C21 Copyright Datta Gupta et al.; licensee Springer. 2015

Keywords: Disability; Wage subsidies; Non-employment; Difference-in-differences (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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DOI: 10.1186/s40173-015-0036-7

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