Estimating the short run effects of South Africa's Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach
Vimal Ranchhod and
Arden Finn ()
No 134, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town
What effect did the introduction of the Employment Tax Incentive (ETI) have on youth employment probabilities in South Africa in the short run? The ETI came into effect on the 1st of January 2014. Its purpose is to stimulate youth employment levels and ease the challenges that many youth experience in finding their first jobs. Under the ETI, firms that employ youth are eligible to claim a deduction from their taxes due, for the portion of their wage bill that is paid to certain groups of youth employees. We utilize nationally representative Quarterly Labour Force Survey (QLFS) data for the period from January 2011 to June 2014, and implement a difference-in-differences methodology at the individual level to identify the effects of the ETI on youth employment probabilities. Our primary finding is that the ETI did not have any statistically significant and positive effects on youth employment probabilities. The point estimate from our preferred regression is -0.005 and the 95% confidence interval is from -0.017 to 0.006. We thus obtain a fairly precisely estimated 'zero effect'. We also find no evidence that the ETI has resulted in an increase in the level of churning in the labour market for youth. What our results imply is that any decrease in tax revenues that arise from the ETI are effectively accruing to firms which, collectively, would have employed most of these youth even in the absence of the ETI. We conclude with a discussion of some of the policy implications of our findings.
Keywords: Youth; Unemployment; South Africa; Employment Tax Incentive (search for similar items in EconPapers)
JEL-codes: H25 H32 J38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-lab, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
http://opensaldru.uct.ac.za/bitstream/handle/11090 ... druwp.pdf?sequence=1 Full text (application/pdf)
Journal Article: Estimating the Short Run Effects of South Africa's Employment Tax Incentive on Youth Employment Probabilities using A Difference-in-Differences Approach (2016)
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:ldr:wpaper:134
Access Statistics for this paper
More papers in SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town Contact information at EDIRC.
Bibliographic data for series maintained by Alison Siljeur ().