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The effects of an employer subsidy on employment outcomes: A study of the work opportunity and welfare‐to‐work tax credits
Author(s) -
Hamersma Sarah
Publication year - 2008
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.20354
Subject(s) - subsidy , welfare , labour economics , propensity score matching , disadvantaged , earned income tax credit , tax credit , work (physics) , matching (statistics) , economics , business , public economics , mechanical engineering , statistics , mathematics , engineering , market economy , economic growth
Employer subsidies such as the Work Opportunity Tax Credit (WOTC) and the Welfare‐to‐Work Tax Credit (WtW) are designed to encourage employment by partially reimbursing employers for wages paid to certain welfare recipients and other disadvantaged workers. In this paper, I examine the effects of these subsidies on employment, wages, and job tenure using unique administrative data from Wisconsin. My ability to precisely identify the subsidy‐certified workers allows me to distinguish the effects of program participation from mere eligibility. Using propensity score matching estimation, I find some evidence of short‐term improvements in labor market outcomes, but little evidence of sustained benefits. © 2008 by the Association for Public Policy Analysis and Management.