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Do earnings subsidies affect job choice? The impact of SSP subsidies on job turnover and wage growth

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  • Helen Connolly
  • Peter Gottschalk

Abstract

This paper explores the impact of earnings subsidies on job duration and wage growth. We develop an analytical framework that predicts that convex subsidies increase job turnover and affect within‐job and between‐job wage growth. This framework is used to analyze the effects of the Canadian Self‐sufficiency Project earnings subsidy. We find that the treatment group had shorter job duration and experienced faster wage growth than controls, which is consistent with the analytical model. Results for between‐job wage growth hold after we correct for compositional bias, but we cannot rule out that within‐job wage growth was not affected by the program. Ce mémoire examine l'impact des subventions aux gains sur la durée de l'emploi et la croissance des salaires. On développe un cadre d'analyse qui prédit que des subventions convexes accroissent le roulement des emplois et affectent la croissance des salaires entre les emplois et à l'intérieur d'une période d'emploi. Ce cadre d'analyse est utilisé pour ausculter les effets des subventions du Projet de l'Autosuffisance au Canada. Il appert que le groupe subventionné a fait l'expérience de durées d'emploi plus courtes et de croissance de salaires plus rapide que le groupe de contrôle, ce qui s'arrime aux prévisions du cadre d'analyse. Les résultats pour la croissance des salaires entre emplois sont robustes même après correction pour le biais de composition, mais on ne peut pas rejeter l'hypothèse que la croissance de salaires dans un emploi n'a pas été affectée par le programme.

Suggested Citation

  • Helen Connolly & Peter Gottschalk, 2009. "Do earnings subsidies affect job choice? The impact of SSP subsidies on job turnover and wage growth," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1276-1304, November.
    • Handle: RePEc:wly:canjec:v:42:y:2009:i:4:p:1276-1304
    DOI: 10.1111/j.1540-5982.2009.01546.x
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    References listed on IDEAS

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    1. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2015. "Evaluating search and matching models using experimental data," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-35, December.
    2. Jeffrey Zabel & Saul Schwartz & Stephen Donald, 2013. "An analysis of the impact of the self-sufficiency project on wages," Empirical Economics, Springer, vol. 44(1), pages 231-259, February.

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    More about this item

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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