The effectiveness of targeted wage subsidies for hard-to-place workers

Ursula Jaenichen and Gesine Stephan

Applied Economics, 2011, vol. 43, issue 10, 1209-1225

Abstract: Targeted wage subsidies paid to employers are an important element of active labour market policies in Germany. This article uses propensity score matching to investigate their effect on the employment and unemployment rates of subsidized hard-to-place workers. In a first scenario, we estimate the average treatment effect of a subsidy on previously unemployed individuals. A second scenario analyses the effects of a subsidy on employment probabilities conditional on taking-up employment. The third scenario investigates the additional effect of a subsidy on individuals, who have participated in a short-term training measure beforehand. Summing up and in line with the literature, the results show that subsidies have a favourable effect on the employment prospects of participants.

Date: 2011
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Working Paper: The effectiveness of targeted wage subsidies for hard-to-place workers (2007)
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DOI: 10.1080/00036840802600426

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