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Do wage subsidies Enhance Employability? Evidence from Australian Youth

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  • J Richardson
Abstract
We examine a panel of unemployed Australian youth to investigate whether participation in a wage subsidy programme offers merely a temporary respite from unemployment, or whether there are longer-lasting positive employability effects. Controlling for selection bias using a bivariate probit analysis, we estimate the effect of participation in the Special Youth Employment Training Program on the probability of being employed in subsequent waves of the data, up to an average of 26 months after subsidy expiry. We find that far from breaking up when support expires, subsidies extend short duration jobs. Furthermore, we find large and significant effects of participation on the subsequent employability. Much of this arises from retention of subsidised jobs, but even excluding this we find evidence of longer-term positive effects.

Suggested Citation

  • J Richardson, 1998. "Do wage subsidies Enhance Employability? Evidence from Australian Youth," CEP Discussion Papers dp0387, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0387
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    References listed on IDEAS

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    1. Breen, R. & Halpin, B., 1989. "Subsidising Jobs: An Evaluation of the Employment Incentive Scheme," Research Series, Economic and Social Research Institute (ESRI), number GRS144.
    2. Couch, Kenneth A, 1992. "New Evidence on the Long-Term Effects of Employment Training Programs," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 380-388, October.
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    6. Stretton, A. & Chapman, B.J., 1990. "An Analysis of Australian Labour Market Programs," CEPR Discussion Papers 247, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    7. Richardson, J., 1997. "Wage subsidies for the long term unemployed: a search theoretic analysis," LSE Research Online Documents on Economics 20337, London School of Economics and Political Science, LSE Library.
    8. J Richardson, 1997. "Wage Subsidies for the Long Term Unemployed: A Search Theoretic Analysis," CEP Discussion Papers dp0347, Centre for Economic Performance, LSE.
    9. repec:bla:econom:v:63:y:1996:i:249:p:113-30 is not listed on IDEAS
    10. Zweimuller, Josef & Winter- Ebmer, Rudolf, 1992. "Manpower Training Programs and Employment Stability," Institute for Research on Labor and Employment, Working Paper Series qt87z0674q, Institute of Industrial Relations, UC Berkeley.
    11. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1371-1391.
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    Cited by:

    1. Aki Kangasharju, 2007. "Do Wage Subsidies Increase Employment in Subsidized Firms?," Economica, London School of Economics and Political Science, vol. 74(293), pages 51-67, February.
    2. Ive MARX, 2001. "Job subsidies and cuts in employers' social security contributions: The verdict of empirical evaluation studies," International Labour Review, International Labour Organization, vol. 140(1), pages 69-83, March.
    3. John P Martin, 1998. "What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences," RBA Annual Conference Volume (Discontinued), in: Guy Debelle & Jeff Borland (ed.),Unemployment and the Australian Labour Market, Reserve Bank of Australia.
    4. Jeff Borland, 2016. "Wage Subsidy Programs: A Primer," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 19(3), pages 131-144.
    5. Antonio Estache & Elena Ianchovichina & Robert Bacon & Ilhem Salamon, 2013. "Infrastructure and Employment Creation in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 12237.
    6. Osuna Victoria, 2009. "Taxing Overtime or Subsidizing Employment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-28, October.
    7. Jochen Kluve & Susana Puerto & David Robalino & Jose Manuel Romero & Friederike Rother & Jonathan Stöterau & Felix Weidenkaff & Marc Witte, 2017. "Interventions to improve the labour market outcomes of youth: A systematic review of training, entrepreneurship promotion, employment services and subsidized employment interventions," Campbell Systematic Reviews, John Wiley & Sons, vol. 13(1), pages 1-288.

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