Exploring the impact of employment policies on wages and employability in the Chilean local labor market

Abstract

While policy evaluation is essential for improving labor programs, a significant knowledge gap exists regarding the impact of local labor market policies in developing countries. This article analyzes the impact of three employment programs in Chile aimed at enhancing employability and wages, namely Youth Employment Subsidy (SEJ), Women's Employment Subsidy (BTM), and Job or Skill Training (CT). We evaluate data from the CASEN Survey in 2015 and 2017 using matching techniques, presenting results for each program separately as they target different segments of the labor market. Fixed effects by territorial units, time effects, and geographic factors are all employed as controls per each matching procedure. For wages, variables such as the worker's productive sector, type of contract, and other socioeconomic controls are considered as well. Robustness analyses through different matching strategies are included. The results indicate that the SEJ and BTM have positive and significant effects on employability, while their impact on wages is null. As for CT, there are positive and significant effects on wages and employability, though with nuanced variations across territories. These findings are relevant in terms of effective labor market support programs, crucial for improving working conditions, narrowing gaps, and increasing employment opportunities.