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Do Long-Term Unemployed Workers Benefit from Targeted Wage Subsidies?

Benjamin Schünemann, Michael Lechner and Conny Wunsch ()

German Economic Review, 2015, vol. 16, issue 1, 43-64

Abstract: type="main" xml:id="geer12040-abs-0001"> 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.

Date: 2015
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Related works:
Working Paper: Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies? (2013) Downloads
Working Paper: Do Long-term Unemployed Workers Benefit from Targeted Wage Subsidies (2011) Downloads
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