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This paper examines the role of non-wage cost rigidities in slowing down employment creation by assessing the effect of a policy aimed at fostering employment for women and young men introduced in Turkey in 2008. Exploiting a difference-in-difference-in differences strategy, I assess the employment effect of the reduction in the employer contribution share of the social security premiums. The results, net of the recent crisis effect, suggest a positive effect of the reduction in non-wage costs on employment creation for the targeted group (women) shortly after the announcement of the policy. JEL Classification C31; J08; J21; J32

Do non-wage cost rigidities slow down employment? Evidence from Turkey