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Determinants of Business Response to Government Tax Incentives for Privately Financed Termination Benefit Programs
Author(s) -
Sheets Robert G.,
Ting Yuan
Publication year - 1992
Publication title -
review of policy research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.832
H-Index - 45
eISSN - 1541-1338
pISSN - 1541-132X
DOI - 10.1111/j.1541-1338.1992.tb00470.x
Subject(s) - incentive , business , government (linguistics) , tax incentive , tax credit , public economics , substitution effect , finance , labour economics , economics , market economy , microeconomics , linguistics , philosophy
This study examines the industry and organizational factors that determine the likelihood of business response to government tax incentives for privately financed termination benefit programs and the substitution problems confronting government programs that use tax incentives to encourage businesses to provide these benefits to their employees. It concludes that government tax incentives will likely have marginal effects on the private provision of termination benefits, especially in large firms in industries with a strong market presence from government. These programs most likely will get high participation from large firms which already provide these benefits to salaried and hourly workers resulting in high substitution effects. They also are likely to extend benefits to hourly employees in firms that already provide similar benefits to salaried workers. However, these tax incentives are likely to have very limited inducement effects on small and medium‐sized firms resulting in low overall target efficiency for these programs.