 Revisiting wage subsidies: How pro-poor is a South African wage subsidy likely to be?Justine Burns, Lawrence Edwards and Karl Pauw Development Southern Africa, 2013, vol. 30, issue 2, 186-210 Abstract: Wage subsidies have been used in both developed and developing countries to raise employment. After a decade of deliberation, the South African Government recently announced the introduction of a wage subsidy scheme. Given the intrinsic link between unemployment and poverty in South Africa, the belief is that a wage subsidy programme sufficient in scope will also make inroads into poverty. However, the way in which jobs are distributed among poor and non-poor jobseekers is crucial. Our general equilibrium microsimulation model confirms the expectation that a higher wage elasticity of labour demand is associated with larger reductions in poverty. We also find that a greater proportion of new jobs accrue to poor jobseekers when the elasticity is high. While youth-targeting does not improve the poverty-reducing effect of the policy, sectors such as textiles, accommodation, and construction services with their pro-poor employment profiles are good candidates for targeting. Date: 2013 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:deveza:v:30:y:2013:i:2:p:186-210 Ordering information: This journal article can be ordered from DOI: 10.1080/0376835X.2013.801197 Access Statistics for this article Development Southern Africa is currently edited by Marie Kirsten More articles in Development Southern Africa from Taylor & Francis Journals |
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