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Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme

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  • Nabanita Datta Gupta
  • Mona Larsen
  • Lars Thomsen

Abstract

We evaluate the potential of wage subsidy programs for reducing non-employment of the disabled by exploiting a reform of the Danish Flexjob scheme targeted towards employing the long-term (partially) disabled. Firms received a salary reimbursement for all employees granted a Flexjob. We examine whether a change from full to partial reimbursement to governmental units affected the share of Flexjobs allocated to retained (insiders) versus non-employed hirees (outsiders). After the reform, the composition of hires changed substantially in favor of insiders, both in absolute and relative terms. A reduction in subsidies thus leads to a decrease in the hiring of the non-employed disabled. JEL Codes: I38, J14, C21 Copyright Datta Gupta et al.; licensee Springer. 2015

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  • Nabanita Datta Gupta & Mona Larsen & Lars Thomsen, 2015. "Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
    • Handle: RePEc:spr:izalpo:v:4:y:2015:i:1:p:1-26:10.1186/s40173-015-0036-7
    DOI: 10.1186/s40173-015-0036-7
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    Cited by:

    1. Sergi Jiménez-Martín & Arnau Juanmarti Mestres & Judit Vall Castello, 2017. "Hiring subsidies for people with disabilities: Do they work?," Policy Papers 2017-11, FEDEA.
    2. Antonia Asenjo & Verónica Escudero & Hannah Liepmann, 2024. "Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 60(1), pages 1-29, January.
    3. Judit Krekó, 2019. "Effect of employment tax incentives: the case of disability quota in Hungary," CEU Working Papers 2019_1, Department of Economics, Central European University.
    4. Krekó, Judit & Telegdy, Álmos, 2022. "The Effects of a Disability Employment Quota When Compliance Is Cheaper than Defiance," IZA Discussion Papers 15726, Institute of Labor Economics (IZA).
    5. Konle-Seidl, Regina, 2016. "Integration arbeitsmarktferner Personen im Ländervergleich: Kein Patentrezept in Sicht (Promoting the integration of people furthest away from the labour market : No recipe in sight)," IAB-Kurzbericht 201601, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Nikolay Angelov & Marcus Eliason, 2018. "Wage subsidies targeted to jobseekers with disabilities: subsequent employment and disability retirement," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-37, December.
    7. Matthew C. Saleh & Susanne M. Bruyère, 2018. "Leveraging Employer Practices in Global Regulatory Frameworks to Improve Employment Outcomes for People with Disabilities," Social Inclusion, Cogitatio Press, vol. 6(1), pages 18-28.
    8. Sergi Jiménez-Martín & Arnau Juanmartí Mestres & Judit Vall Castelló, 2019. "Hiring subsidies for people with a disability: do they work?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(5), pages 669-689, July.

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    More about this item

    Keywords

    Disability; Wage subsidies; Non-employment; Difference-in-differences;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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