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Do earnings subsidies affect job choice? The impact of SSP subsidies on job turnover and wage growth

Helen Connolly () and Peter Gottschalk

Canadian Journal of Economics, 2009, vol. 42, issue 4, 1276-1304

Abstract: This paper explores the impact of earnings subsidies on job duration and wage growth. We develop an analytical framework that predicts that convex subsidies increase job turnover and affect within-job and between-job wage growth. This framework is used to analyze the effects of the Canadian Self-sufficiency Project earnings subsidy. We find that the treatment group had shorter job duration and experienced faster wage growth than controls, which is consistent with the analytical model. Results for between-job wage growth hold after we correct for compositional bias, but we cannot rule out that within-job wage growth was not affected by the program.

JEL-codes: H53 I38 (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:cje:issued:v:42:y:2009:i:4:p:1276-1304