Pub Date : 2022-01-01DOI: 10.2478/izajolp-2022-0004
M. Malik, S. Singh, Falguni Pattanaik
Abstract Aging is the foremost challenge in recent times, given the demographic shift in populations across the world. It implies the costs of healthcare burden and involves economic and social security challenges through shortage of labor supply, consumption–saving paradox, increase in expenditure on healthcare, and most importantly, social capital among the developing countries. Furthermore, there is a likely challenge of old age security in terms of income and expenditure due to increasing healthcare costs and low earning incentives at older ages. India currently has the second largest population globally, with >9% of its population accounting for aging. Based on the multidimensional aging index (AI) using the latest longitudinal survey data of older adults in India, we examined the possible challenges of the economics of aging in India while examining the economic health and social outcomes of the elderly. Our results found that the elderly in India are highly exposed to negative impacts due to vulnerability in socio-economic and health spheres of life. Low labor force participation, lack of skills, and low literacy are the prevalent challenges faced by the elderly Indian population, particularly women. Similarly, the fiscal challenges include increased income tax and insurance coverage for the elderly, while health challenges imply a greater proportion of the disabled and multi-morbid, leading to more burden on the health and welfare system of India. Thus, given the possible short- and long-term effects of aging on the path of economic growth in India, policy incentives are required to minimize the impact and avert the burden of population aging in the country.
{"title":"Economics of Healthy Aging in India: A Multidimensional Perspective","authors":"M. Malik, S. Singh, Falguni Pattanaik","doi":"10.2478/izajolp-2022-0004","DOIUrl":"https://doi.org/10.2478/izajolp-2022-0004","url":null,"abstract":"Abstract Aging is the foremost challenge in recent times, given the demographic shift in populations across the world. It implies the costs of healthcare burden and involves economic and social security challenges through shortage of labor supply, consumption–saving paradox, increase in expenditure on healthcare, and most importantly, social capital among the developing countries. Furthermore, there is a likely challenge of old age security in terms of income and expenditure due to increasing healthcare costs and low earning incentives at older ages. India currently has the second largest population globally, with >9% of its population accounting for aging. Based on the multidimensional aging index (AI) using the latest longitudinal survey data of older adults in India, we examined the possible challenges of the economics of aging in India while examining the economic health and social outcomes of the elderly. Our results found that the elderly in India are highly exposed to negative impacts due to vulnerability in socio-economic and health spheres of life. Low labor force participation, lack of skills, and low literacy are the prevalent challenges faced by the elderly Indian population, particularly women. Similarly, the fiscal challenges include increased income tax and insurance coverage for the elderly, while health challenges imply a greater proportion of the disabled and multi-morbid, leading to more burden on the health and welfare system of India. Thus, given the possible short- and long-term effects of aging on the path of economic growth in India, policy incentives are required to minimize the impact and avert the burden of population aging in the country.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43233966","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers over 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple difference methodology the hiring subsidy is shown to increase the job finding rate by 13% without any evidence of spill-over effects. This effect is driven by a positive effect on individuals with at least a bachelor’s degree. However, the hiring subsidy mainly created temporary short-lived employment: eligible jobseekers were not more likely to find employment that lasted at least twelve consecutive months than ineligible jobseekers.
{"title":"How Effective are Hiring Subsidies to Reduce Long-Term Unemployment Among Prime-Aged Jobseekers? Evidence from Belgium","authors":"Sam Desiere, Bart L. W. Cockx","doi":"10.26481/umaror.2021005","DOIUrl":"https://doi.org/10.26481/umaror.2021005","url":null,"abstract":"Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers over 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple difference methodology the hiring subsidy is shown to increase the job finding rate by 13% without any evidence of spill-over effects. This effect is driven by a positive effect on individuals with at least a bachelor’s degree. However, the hiring subsidy mainly created temporary short-lived employment: eligible jobseekers were not more likely to find employment that lasted at least twelve consecutive months than ineligible jobseekers.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"69337883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-01DOI: 10.2478/izajolp-2021-0009
Robert Tucker Omberg
Abstract Revisiting research from the 1990s from Castillo-Freeman and Krueger, I use the synthetic control method of Abadie et al. to estimate the impact of the most recent increase in the federal minimum wage on employment in Puerto Rico. I estimate that the employment/population ratio of various groups in Puerto Rico was significantly lower than that of a data-constructed synthetic Puerto Rico which did not raise its minimum wage. Placebo tests on other donor units, time periods, and population groups suggest that a significant portion of this gap is a result of the minimum wage. Groups with greater exposure to the minimum wage, such as teens and restaurant workers, experienced proportionally greater declines in employment. My results suggest an own-wage elasticity of employment in Puerto Rico of −0.68, higher than estimates from the mainland, which suggests that the employment response to minimum wages may be more dramatic at higher relative minimum wages.
{"title":"Puerto Rico's minimum wage: Revisiting a price floor with bite","authors":"Robert Tucker Omberg","doi":"10.2478/izajolp-2021-0009","DOIUrl":"https://doi.org/10.2478/izajolp-2021-0009","url":null,"abstract":"Abstract Revisiting research from the 1990s from Castillo-Freeman and Krueger, I use the synthetic control method of Abadie et al. to estimate the impact of the most recent increase in the federal minimum wage on employment in Puerto Rico. I estimate that the employment/population ratio of various groups in Puerto Rico was significantly lower than that of a data-constructed synthetic Puerto Rico which did not raise its minimum wage. Placebo tests on other donor units, time periods, and population groups suggest that a significant portion of this gap is a result of the minimum wage. Groups with greater exposure to the minimum wage, such as teens and restaurant workers, experienced proportionally greater declines in employment. My results suggest an own-wage elasticity of employment in Puerto Rico of −0.68, higher than estimates from the mainland, which suggests that the employment response to minimum wages may be more dramatic at higher relative minimum wages.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49312945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-01DOI: 10.2478/izajolp-2022-0001
Jérémy Hervelin
Abstract Although short message services (SMS) are constantly used to transmit information, little is known about the use of SMS by public institutions to direct people. This paper presents a field experiment in France about the effectiveness of SMS in directing disadvantaged people toward public services. Two types of treatment SMS were provided: one type had its content written in a formal style; the second type SMS style was much informal. All the SMS were individualized and included specific information about the agencies. Results indicate that the SMS had no significant effect on enrollment. There is also no apparent heterogeneous effect according to individual, agency, or location characteristics. In line with other academic evidence, these findings suggest that SMS have very limited effectiveness in directing this population toward public services.
{"title":"Directing young dropouts via SMS: evidence from a field experiment","authors":"Jérémy Hervelin","doi":"10.2478/izajolp-2022-0001","DOIUrl":"https://doi.org/10.2478/izajolp-2022-0001","url":null,"abstract":"Abstract Although short message services (SMS) are constantly used to transmit information, little is known about the use of SMS by public institutions to direct people. This paper presents a field experiment in France about the effectiveness of SMS in directing disadvantaged people toward public services. Two types of treatment SMS were provided: one type had its content written in a formal style; the second type SMS style was much informal. All the SMS were individualized and included specific information about the agencies. Results indicate that the SMS had no significant effect on enrollment. There is also no apparent heterogeneous effect according to individual, agency, or location characteristics. In line with other academic evidence, these findings suggest that SMS have very limited effectiveness in directing this population toward public services.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42649267","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-01DOI: 10.2478/izajolp-2021-0005
Nerijus Černiauskas, Alain Jousten
Abstract We estimate effective and optimal net income tax schedules and compare them to the estimated statutory rates for the case of Lithuania for the period 2014–2015. Values of effective net tax rates are estimated from the survey of EU Statistics on Income and Living Conditions; the statutory net tax rates are estimated with the European tax-benefit simulator EUROMOD, whereas optimal net taxes are calculated via Saez (2002) methodology. We find that the three net tax schedules are similar for employees in the middle of the income distribution. At the bottom of the income distribution, optimal net tax schedules suggest higher in-work benefits. The net tax schedules diverge substantially for the self-employed. At the top of the income distribution, where the majority of self-employed are concentrated, the self-employed are required to pay 15 cents less net taxes per Euro than employees—and they effectively pay 29 cents less.
{"title":"Statutory, effective, and optimal net tax schedules in Lithuania","authors":"Nerijus Černiauskas, Alain Jousten","doi":"10.2478/izajolp-2021-0005","DOIUrl":"https://doi.org/10.2478/izajolp-2021-0005","url":null,"abstract":"Abstract We estimate effective and optimal net income tax schedules and compare them to the estimated statutory rates for the case of Lithuania for the period 2014–2015. Values of effective net tax rates are estimated from the survey of EU Statistics on Income and Living Conditions; the statutory net tax rates are estimated with the European tax-benefit simulator EUROMOD, whereas optimal net taxes are calculated via Saez (2002) methodology. We find that the three net tax schedules are similar for employees in the middle of the income distribution. At the bottom of the income distribution, optimal net tax schedules suggest higher in-work benefits. The net tax schedules diverge substantially for the self-employed. At the top of the income distribution, where the majority of self-employed are concentrated, the self-employed are required to pay 15 cents less net taxes per Euro than employees—and they effectively pay 29 cents less.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43724075","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-01DOI: 10.2478/izajolp-2021-0008
Abel Egessa, John Bosco Nnyanzi, J. Muwanga
Abstract Youth unemployment in Uganda increased from 12.7% in 2012/13 to 13.3 in 2016/17, despite a decline in the overall national unemployment rate from 11.1% to 9.2%. This poses serious development challenges, particularly to the ongoing efforts to poverty reduction. The main objective of the current study is to examine the extent to which gender, education, residence, and age determine youth unemployment in Uganda. Using recent data from the Uganda National Household Survey 2016/17 collected by the Uganda National Bureau of Statistics, we obtained a sample of 5,912 respondents for the ages between 18 years and 30 years. The main findings based on a binary logistic regression approach, reveal that education, gender, residence, and age are all critical in driving youth unemployment. The Ugandan youth who has some level of education is more likely to be unemployed compared to those with no education. But the youth that attended post-secondary education is associated with the highest unemployment probability followed by those with secondary school education and finally by primary education. While an increase in age appears to increase youth unemployment for females, the married youth have less chances of being unemployed compared to the unmarried youth. Moreover, as the probability of being unemployed reduces for the married youth, being divorced increases that probability. Similarly, the male youth are found more likely to be unemployed than their female counterparts. Additionally, the urban youth increased their chances of unemployment compared to the rural ones. Likewise, males are far more likely to remain in unemployment relative to females, just as living in the northern, eastern, or western region as a youth is less risky in terms of unemployment compared to living in the central region. On the other hand, whereas the education level of the household head is not important for youth unemployment, the marital status and gender of the household head are critical. The indirect effects of education, gender, residence, and age are clearly notable. Implications for policy and research are drawn.
{"title":"Determinants of youth unemployment in Uganda: The role of gender, education, residence, and age","authors":"Abel Egessa, John Bosco Nnyanzi, J. Muwanga","doi":"10.2478/izajolp-2021-0008","DOIUrl":"https://doi.org/10.2478/izajolp-2021-0008","url":null,"abstract":"Abstract Youth unemployment in Uganda increased from 12.7% in 2012/13 to 13.3 in 2016/17, despite a decline in the overall national unemployment rate from 11.1% to 9.2%. This poses serious development challenges, particularly to the ongoing efforts to poverty reduction. The main objective of the current study is to examine the extent to which gender, education, residence, and age determine youth unemployment in Uganda. Using recent data from the Uganda National Household Survey 2016/17 collected by the Uganda National Bureau of Statistics, we obtained a sample of 5,912 respondents for the ages between 18 years and 30 years. The main findings based on a binary logistic regression approach, reveal that education, gender, residence, and age are all critical in driving youth unemployment. The Ugandan youth who has some level of education is more likely to be unemployed compared to those with no education. But the youth that attended post-secondary education is associated with the highest unemployment probability followed by those with secondary school education and finally by primary education. While an increase in age appears to increase youth unemployment for females, the married youth have less chances of being unemployed compared to the unmarried youth. Moreover, as the probability of being unemployed reduces for the married youth, being divorced increases that probability. Similarly, the male youth are found more likely to be unemployed than their female counterparts. Additionally, the urban youth increased their chances of unemployment compared to the rural ones. Likewise, males are far more likely to remain in unemployment relative to females, just as living in the northern, eastern, or western region as a youth is less risky in terms of unemployment compared to living in the central region. On the other hand, whereas the education level of the household head is not important for youth unemployment, the marital status and gender of the household head are critical. The indirect effects of education, gender, residence, and age are clearly notable. Implications for policy and research are drawn.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45360591","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Australia's “Transition to Retirement Income Streams” (TRIS) program aims to prolong labor force participation for older workers (aged 55–65 years) by offering early access to a worker's compulsory retirement savings (superannuation). Using a difference-in-differences design, our results suggest a small labor supply response, which increases after the program's initial years. The size of the effects appears to be consistent with the program adoption profile, which was low initially. For this reason, our estimates should be viewed as a lower bound for the true effects. We find that individuals with higher incomes are more likely to adopt TRIS. At least half of the program participants appear to be using strategies to minimize tax, a behavioral response that seems at odds with the program's intent.
{"title":"Does the early release of retirement savings prolong labor market participation for workers approaching retirement? Evidence from Australia's “Transition to Retirement Income Streams” program","authors":"Andrew Carter","doi":"10.2139/ssrn.3702757","DOIUrl":"https://doi.org/10.2139/ssrn.3702757","url":null,"abstract":"Abstract Australia's “Transition to Retirement Income Streams” (TRIS) program aims to prolong labor force participation for older workers (aged 55–65 years) by offering early access to a worker's compulsory retirement savings (superannuation). Using a difference-in-differences design, our results suggest a small labor supply response, which increases after the program's initial years. The size of the effects appears to be consistent with the program adoption profile, which was low initially. For this reason, our estimates should be viewed as a lower bound for the true effects. We find that individuals with higher incomes are more likely to adopt TRIS. At least half of the program participants appear to be using strategies to minimize tax, a behavioral response that seems at odds with the program's intent.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2020-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44914314","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-05-01DOI: 10.5089/9781513554464.001.A001
Hiroaki Miyamoto, Nujin Suphaphiphat
Abstract While unemployment rates in Europe declined after the global financial crisis until 2018/2019, the incidence of long-term unemployment, the share of people who have been unemployed for >1 year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores the factors associated with long-term unemployment in European countries using a panel of 25 European countries over the period 2000–2018. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among the different types of active labor market policies, training and startup incentives are found to be effective in reducing long-term unemployment.
{"title":"Mitigating Long-term Unemployment in Europe","authors":"Hiroaki Miyamoto, Nujin Suphaphiphat","doi":"10.5089/9781513554464.001.A001","DOIUrl":"https://doi.org/10.5089/9781513554464.001.A001","url":null,"abstract":"Abstract While unemployment rates in Europe declined after the global financial crisis until 2018/2019, the incidence of long-term unemployment, the share of people who have been unemployed for >1 year to the total unemployed, remained high. Moreover, the COVID-19 pandemic could aggravate the long-term unemployment. This paper explores the factors associated with long-term unemployment in European countries using a panel of 25 European countries over the period 2000–2018. We find that skill mismatches, labor market matching efficiency, and labor market policies are associated with the incidence of long-term unemployment. Among the different types of active labor market policies, training and startup incentives are found to be effective in reducing long-term unemployment.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43303793","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Population aging in Europe calls for an overall rise in the age of retirement. However, most observers agree that the latter should be differentiated to account for different individuals’ heterogeneous health when they grow older. This paper explores the relevance of this idea using the European Survey of Health, Ageing and Retirement in Europe (SHARE) panel data. It first quantifies the health gradient across and within each of the European countries across sociodemographic groups (i.e., Gender × Education) at typical retirement age. It then estimates the degree of retirement age differentiation that would be needed to equalize expected health at the moment of retirement. Results point at the need for a very high degree of differentiation to equalize expected health, both across and within, European countries. But the paper also shows that systematic retirement age differentiation would fail to match a significant portion of the full distribution of health status. In a world synonymous with systematic health-based retirement age differentiation, there would still be a lot of what health economists call F-mistakes ([F]ailure of treatment, i.e., no retirement for people in poor health) and E-mistakes ([E]xcessive treatment, i.e., people in good health going for retirement).
{"title":"Differentiating retirement age to compensate for health differences","authors":"V. Vandenberghe","doi":"10.2139/ssrn.3582657","DOIUrl":"https://doi.org/10.2139/ssrn.3582657","url":null,"abstract":"Abstract Population aging in Europe calls for an overall rise in the age of retirement. However, most observers agree that the latter should be differentiated to account for different individuals’ heterogeneous health when they grow older. This paper explores the relevance of this idea using the European Survey of Health, Ageing and Retirement in Europe (SHARE) panel data. It first quantifies the health gradient across and within each of the European countries across sociodemographic groups (i.e., Gender × Education) at typical retirement age. It then estimates the degree of retirement age differentiation that would be needed to equalize expected health at the moment of retirement. Results point at the need for a very high degree of differentiation to equalize expected health, both across and within, European countries. But the paper also shows that systematic retirement age differentiation would fail to match a significant portion of the full distribution of health status. In a world synonymous with systematic health-based retirement age differentiation, there would still be a lot of what health economists call F-mistakes ([F]ailure of treatment, i.e., no retirement for people in poor health) and E-mistakes ([E]xcessive treatment, i.e., people in good health going for retirement).","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46508289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-05-01DOI: 10.2478/izajolp-2021-0001
Johanna Rickne
Abstract Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the domestic labor market. I evaluate a Swedish policy where domestic service firms receive a 50% tax deduction on labor costs. Detailed data from tax records identify all formal workers and owners of firms that receive deductions. I describe the composition of workers and owners in these firms with respect to three groups targeted by Swedish policymakers: refugees, people with low education, and people who enter the workforce from long-term unemployment. I find that the shares of refugees and long-term unemployed in the subsidized sector barely exceed the shares in the full private labor force, and fall far below the shares in industrial sectors with a predominance of elementary jobs. The share of people with low education is higher than in the full private sector and on par with other low-skilled sectors. I conclude that the tax subsidy largely failed to improve employment opportunities among the target groups. An extended analysis suggests that labor immigration from other EU countries may be a partial explanation for this. EU immigrants operate half of all subsidized firms in Sweden's largest cities and nearly exclusively employ other EU immigrants.
{"title":"Who cleans my house if the government pays? Refugees, low-educated workers, and long-term unemployed in tax-subsidized domestic service firms","authors":"Johanna Rickne","doi":"10.2478/izajolp-2021-0001","DOIUrl":"https://doi.org/10.2478/izajolp-2021-0001","url":null,"abstract":"Abstract Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the domestic labor market. I evaluate a Swedish policy where domestic service firms receive a 50% tax deduction on labor costs. Detailed data from tax records identify all formal workers and owners of firms that receive deductions. I describe the composition of workers and owners in these firms with respect to three groups targeted by Swedish policymakers: refugees, people with low education, and people who enter the workforce from long-term unemployment. I find that the shares of refugees and long-term unemployed in the subsidized sector barely exceed the shares in the full private labor force, and fall far below the shares in industrial sectors with a predominance of elementary jobs. The share of people with low education is higher than in the full private sector and on par with other low-skilled sectors. I conclude that the tax subsidy largely failed to improve employment opportunities among the target groups. An extended analysis suggests that labor immigration from other EU countries may be a partial explanation for this. EU immigrants operate half of all subsidized firms in Sweden's largest cities and nearly exclusively employ other EU immigrants.","PeriodicalId":45367,"journal":{"name":"IZA Journal of Labor Policy","volume":null,"pages":null},"PeriodicalIF":0.5,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48395438","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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