Estimating the effects of wage subsidies on the labour demand in West Germany using the IAB establishment panel

Abstract

"Wage subsidies are used as one means to fight unemployment in Germany. Despite their growing importance evaluation studies are rather scarce and aim on the labour supply side. In this paper we estimate their effects on the labour demand using the IAB establishment panel. This approach has the edvantage that substitution effects already 'net out' at the firm level. To account for the selectivity problem in microeconometric evaluation studies, we apply a conditional difference-in-differences approach, i.e. we use a matching approach to construct a suitable control group in a first step, followed by a difference-in-differences estimation. We concentrate on West German establishments and the time period 1995 to 1999 and evaluate programmes including employment integration measures and job creation schemes. We do not find any positive long-run effects on the employment for participating establishments." (Author's abstract, IAB-Doku) ((en))

Cite article

Hujer, R., Caliendo, M. & Radic, D. (2001): Estimating the effects of wage subsidies on the labour demand in West Germany using the IAB establishment panel. In: Ifo-Studien, Vol. 47, No. 2, p. 163-197.