The Efficacy of Hiring Credits in Distressed Areas
Jorge Pérez Pérez () and
No 2020-05, Working Papers from Banco de México
We analyze the efficacy of hiring tax credits, particularly in distressed labor markets. These types of programs have proven hard to assess as their introduction at the state level tends to be endogenous to local conditions and future prospects. We conduct an empirical study of a hiring tax credit program implemented in North Carolina in the mid 1990s, which has a quasi-experimental design. Specifically, the 100 counties in the state are ranked each year by a formula trying to capture their economic distress level. The generosity of the tax credits jumps discontinuously at various ranking thresholds allowing for the use of regression discontinuity methods. Our estimates show fairly sizable and robust impacts on unemployment - a $9,000 credit leads to a nearly 0.5 percentage points reduction in the unemployment rate in the counties where the credit was made available. The attendant increase in employment levels appears to be around 3%.
Keywords: Hiring tax credits; employment; local labor markets (search for similar items in EconPapers)
JEL-codes: J2 R14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.banxico.org.mx/publications-and-press/ ... -8A1F2BDA4DC1%7D.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bdm:wpaper:2020-05
Access Statistics for this paper
More papers in Working Papers from Banco de México Contact information at EDIRC.
Bibliographic data for series maintained by Dirección de Sistemas ().