Employment effects and fiscal costs of wage subsidies in the low-wage sector

Abstract

"In this paper the basic manifestations and effects of wage subsidies are outlined and the probable employment effects of the existing subsidies are shown. In addition to this the paper analyses what employment effects and fiscal costs would result from proposed changes to the existing forms of subsidy. Both wage subsidies to firms and wage-related transfers to employees in the form of improved possibilities of earning in addition to receiving social assistance or unemployment benefit are considered. In view of the considerable amount of funding needed per additional employee, wage subsidies to firms in the form of subsidising the social security contributions or a degressively graded subsidy of hourly wages in the entire low-wage sector do not appear to be justifiable alone with the aim of increasing employment. No larger growths in employment are to be expected from improved possibilities of earning in addition to receiving social assistance or unemployment benefit, either." (Author's abstract, IAB-Doku) ((en))

Cite article

Buslei, H. & Steiner, V. (2000): Beschäftigungseffekte und fiskalische Kosten von Lohnsubventionen im Niedriglohnbereich. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 33, No. 1, p. 54-67.