Economics at your fingertips  

Who cleans my house if the government pays? Refugees, low-educated workers, and long-term unemployed in tax-subsidized domestic service firms

Johanna Rickne ()

IZA Journal of Labor Policy, 2021, vol. 11, issue 1, 37

Abstract: Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the domestic labor market. I evaluate a Swedish policy where domestic service firms receive a 50% tax deduction on labor costs. Detailed data from tax records identify all formal workers and owners of firms that receive deductions. I describe the composition of workers and owners in these firms with respect to three groups targeted by Swedish policymakers: refugees, people with low education, and people who enter the workforce from long-term unemployment. I find that the shares of refugees and long-term unemployed in the subsidized sector barely exceed the shares in the full private labor force, and fall far below the shares in industrial sectors with a predominance of elementary jobs. The share of people with low education is higher than in the full private sector and on par with other low-skilled sectors. I conclude that the tax subsidy largely failed to improve employment opportunities among the target groups. An extended analysis suggests that labor immigration from other EU countries may be a partial explanation for this. EU immigrants operate half of all subsidized firms in Sweden's largest cities and nearly exclusively employ other EU immigrants.

Keywords: Domestic Services; Tax Deduction; Employment; Refugee Immigrants (search for similar items in EconPapers)
JEL-codes: H2 J21 J23 J61 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.2478/izajolp-2021-0001

Access Statistics for this article

IZA Journal of Labor Policy is currently edited by Denis Fougère, Juan F. Jimeno and Núria Rodríguez-Planas

More articles in IZA Journal of Labor Policy from Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Bibliographic data for series maintained by Peter Golla ().

Page updated 2023-06-15
Handle: RePEc:vrs:izajlp:v:11:y:2021:i:1:p:37:n:4