IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2019-28.html
   My bibliography  Save this paper

Can a wage subsidy system help reduce 50 per cent youth unemployment?: Evidence from South Africa

Author

Listed:
  • Amina Ebrahim
  • Jukka Pirttilä

Abstract

The paper examines the incidence and employment impacts of the Employment Tax Incentive, a South African wage subsidy system that is targeted at the employers of low-wage youth. The paper uses a triple differences strategy and survey and administrative data, covering the universe of South African workers. The results reveal that the system has not had a positive influence on the employment rate of eligible workers. The number of jobs in the region where the subsidy is the greatest has increased, but the increase is not statistically significant, perhaps due to a low take-up rate.

Suggested Citation

  • Amina Ebrahim & Jukka Pirttilä, 2019. "Can a wage subsidy system help reduce 50 per cent youth unemployment?: Evidence from South Africa," WIDER Working Paper Series wp-2019-28, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2019-28
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp-2019-28.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    2. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
    3. Emmanuel Saez & Manos Matsaganis & Panos Tsakloglou, 2012. "Earnings Determination and Taxes: Evidence From a Cohort-Based Payroll Tax Reform in Greece," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 493-533.
    4. Amina Ebrahim & Murray Leibbrandt & Vimal Ranchhod, 2017. "The effects of the Employment Tax Incentive on South African employment," WIDER Working Paper Series 005, World Institute for Development Economic Research (UNU-WIDER).
    5. Amina Ebrahim & Murray Leibbrandt & Vimal Ranchhod, 2017. "The effects of the Employment Tax Incentive on South African employment," WIDER Working Paper Series wp-2017-5, World Institute for Development Economic Research (UNU-WIDER).
    6. Vimal Ranchhod & Arden Finn, 2015. "Estimating the Effects of South Africa's Youth Employment Tax Incentive – An Update," SALDRU Working Papers 152, Southern Africa Labour and Development Research Unit, University of Cape Town.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amina Ebrahim & Jukka Pirttilä, 2022. "A policy for the jobless youth in South Africa: Individual impacts of the Employment Tax Incentive," WIDER Working Paper Series wp-2022-124, World Institute for Development Economic Research (UNU-WIDER).
    2. Kim, Jinyoung & Kim, Seonghoon & Koh, Kanghyock, 2022. "Labor market institutions and the incidence of payroll taxation," Journal of Public Economics, Elsevier, vol. 209(C).
    3. Amina Ebrahim & Rebone Gcabo & Lilian Khumalo & Jukka Pirttilä, 2019. "Tax research in South Africa," WIDER Working Paper Series wp-2019-9, World Institute for Development Economic Research (UNU-WIDER).
    4. Audrey Guo, 2023. "Payroll Tax Incidence: Evidence from Unemployment Insurance," Papers 2304.05605, arXiv.org.
    5. Isaac Marcelin & Daniel Brink & David Oluwatosin Fadiran & Hammed Adedeji Amusa, 2019. "Subsidized labour and firms: Investment, profitability, and leverage," WIDER Working Paper Series wp-2019-50, World Institute for Development Economic Research (UNU-WIDER).
    6. Benzarti, Youssef & Harju, Jarkko, 2021. "Can payroll tax cuts help firms during recessions?," Journal of Public Economics, Elsevier, vol. 200(C).
    7. Adam, Stuart & Phillips, David & Roantree, Barra, 2019. "35 years of reforms: A panel analysis of the incidence of, and employee and employer responses to, social security contributions in the UK," Journal of Public Economics, Elsevier, vol. 171(C), pages 29-50.
    8. Isaac Marcelin & Daniel Brink & Wei Sun, 2021. "Firms' resilience to financial constraints: The role of trade credit," WIDER Working Paper Series wp-2021-78, World Institute for Development Economic Research (UNU-WIDER).
    9. Egebark, Johan & Kaunitz, Niklas, 2018. "Payroll taxes and youth labor demand," Labour Economics, Elsevier, vol. 55(C), pages 163-177.
    10. Ku, Hyejin & Schönberg, Uta & Schreiner, Ragnhild C., 2020. "Do place-based tax incentives create jobs?," Journal of Public Economics, Elsevier, vol. 191(C).
    11. Santiago Garriga & Dario Tortarolo, 2020. "Wage effects of employer-mediated transfers," Discussion Papers 2020-08, Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP).
    12. Bojosi Morule & Konstantin Makrelov, 2019. "The effectiveness of the Employment Tax Incentive August 2019," Occasional Bulletin of Economic Notes 9481, South African Reserve Bank.
    13. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 117999, London School of Economics and Political Science, LSE Library.
    14. Haroon Bhorat & Robert Hill & Safia Khan & Kezia Lilenstein & Ben Stanwix, 2020. "The Employment Tax Incentive Scheme in South Africa: An Impact Assessment," Working Papers 202007, University of Cape Town, Development Policy Research Unit.
    15. Hildegunn E. Stokke, 2021. "Regional payroll tax cuts and individual wages: heterogeneous effects of worker ability and firm productivity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1360-1384, December.
    16. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 121970, London School of Economics and Political Science, LSE Library.
    17. Hyejin Ku & Uta Schönberg & Ragnhild C. Schreiner, 2018. "How Do Firms Respond to Place-Based Tax Incentives?," RF Berlin - CReAM Discussion Paper Series 1811, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    18. Ihsaan Bassier, 2022. "Firms and inequality when unemployment is high," CEP Discussion Papers dp1872, Centre for Economic Performance, LSE.
    19. Guo, Audrey, 2020. "The Effects of Unemployment Insurance Taxation on Multi-Establishment Firms," MPRA Paper 97919, University Library of Munich, Germany.
    20. Charles Boissel & Adrien Matray, 2022. "RETRACTED BY THE AUTHORS: Dividend Taxes and the Allocation of Capital," American Economic Review, American Economic Association, vol. 112(9), pages 2884-2920, September.

    More about this item

    Keywords

    Employment; Youth unemployment; Taxation; Wage subsidy; Administrative data;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp-2019-28. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.