How long and how much? Learning about the design of wage subsidies from policy changes and discontinuities

Anna Sjögren and Johan Vikström ()

Labour Economics, 2015, vol. 34, issue C, 127-137

Abstract: Employment and wage subsidies are used to combat long-term unemployment, yet there is little research to guide the design of such programs. Discontinuities and changes in the design and implementation of wage subsidies under the Swedish New Start Jobs-policy allow us to study effects of both subsidy rate and subsidy duration. We find that wage subsidies have substantial effect on job-finding rates for those eligible. The effect is stronger for larger subsidies and more than doubles as the length of the subsidy doubles. Although employment drops as subsidies expire, the probability of being employed remains higher for workers finding subsidized employment also after the expiry of the employment subsidies.

Keywords: Wage-subsidies; Subsidy duration; Unemployment duration; Subsidy rate; Policy design; Long-term employment (search for similar items in EconPapers)
JEL-codes: J08 J64 J68 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:34:y:2015:i:c:p:127-137

DOI: 10.1016/j.labeco.2015.03.009

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