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The Employment and Earnings Impacts of the Targeted Jobs Tax Credit

Author

Listed:
  • Kevin Hollenbeck

    (W.E. Upjohn Institute for Employment Research)

  • Richard J. Willke

    (American Medical Association)

Abstract

The Targeted Jobs Tax Credit (TJTC) is intended to stimulate the employment of individuals who are members of certain groups of the labor force by providing a wage subsidy (in the form of a tax credit) to employers of recently-hired eligible workers. This intervention into the labor market has direct and indirect earnings and employment consequences for both eligible and ineligible individuals. The paper evaluates the impacts of TJTC by using a treatment and comparison group methodology. Corrections for nonrandom selection are undertaken. The primary sources of data are state quarterly wage record data from the Unemployment Insurance system and the Employment Service Automated Reporting System (ESARS). The results indicate that the availability and usage of TJTC enhances outcomes for nonwhite male youth (both eligible and ineligible), but is stigmatizing for eligible individuals from other race/sex groups, who appear to be slightly worse off because of the program than their ineligible counterparts. Obtaining a voucher increases employment and wages, but it appears as if selection effects are responsible. Importantly, the improved outcomes are not accompanied by displacement effects. Finally, being certified results in increased wages, but higher turnover and lower total employment.

Suggested Citation

  • Kevin Hollenbeck & Richard J. Willke, 1991. "The Employment and Earnings Impacts of the Targeted Jobs Tax Credit," Upjohn Working Papers 91-07, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:91-07
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    References listed on IDEAS

    as
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    Cited by:

    1. Raphael W. Bostic & Allen C. Prohofsky, 2006. "Enterprise Zones and Individual Welfare: A Case Study of California," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 175-203, May.
    2. Edward C. Lorenz, 1995. "TJTC and the promise and reality of redistributive vouchering and tax credit policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(2), pages 270-290.
    3. Arthur Sweetman & Matthew D. Webb & Casey Warman, 2014. "How Targeted Is Targeted Tax Relief? Evidence From The Unemployment Insurance Youth Hires Program," Working Paper 1298, Economics Department, Queen's University.
    4. David Neumark & Diego Grijalva, 2017. "The Employment Effects of State Hiring Credits," ILR Review, Cornell University, ILR School, vol. 70(5), pages 1111-1145, October.
    5. John Van Reenen, 2004. "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 461-496, National Bureau of Economic Research, Inc.
    6. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Leibniz Centre for European Economic Research.
    7. Ive MARX, 2001. "Job subsidies and cuts in employers' social security contributions: The verdict of empirical evaluation studies," International Labour Review, International Labour Organization, vol. 140(1), pages 69-83, March.
    8. Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, January.
    9. Gunderson, Jill Marie & Hotchkiss, Julie L., 2007. "Job Separation Behavior of WOTC Workers: Results from a Unique Case Study," MPRA Paper 44801, University Library of Munich, Germany.
    10. Harry J. Holzer, 1994. "Black employment problems: New evidence, old questions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(4), pages 699-722.
    11. Schünemann Benjamin & Lechner Michael & Wunsch Conny, 2015. "Do Long-Term Unemployed Workers Benefit from Targeted Wage Subsidies?," German Economic Review, De Gruyter, vol. 16(1), pages 43-64, February.
    12. Christine Ryan & John Wilson & William Fulton, 2003. "The Impact of Urban Growth Boundaries on Future Urbanization," Working Paper 8610, USC Lusk Center for Real Estate.
    13. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    14. Christopher J. O'Leary, 2017. "Evaluating Public Employment Programs with Field Experiments: A Survey of American Evidence," Upjohn Working Papers 17-279, W.E. Upjohn Institute for Employment Research.
    15. Stacy Dickert-Conlin & Douglas Holtz-Eakin, 1999. "Employee-Based versus Employer-Based Subsidies to Low-Wage Workers: A Public Finance Perspective," JCPR Working Papers 79, Northwestern University/University of Chicago Joint Center for Poverty Research.
    16. Olugbenga Ajilore, 2012. "Did the Work Opportunity Tax Credit Cause Subsidized Worker Substitution?," Economic Development Quarterly, , vol. 26(3), pages 231-237, August.
    17. David Neumark & Diego Grijalva, 2013. "The Employment Effects of State Hiring Credits During and After the Great Recession," NBER Working Papers 18928, National Bureau of Economic Research, Inc.
    18. Sarah Hamersma & Carolyn Heinrich, 2008. "Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes," Southern Economic Journal, John Wiley & Sons, vol. 74(4), pages 1123-1148, April.
    19. repec:max:cprpbr:14 is not listed on IDEAS

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    More about this item

    Keywords

    targeted; tax; job; credit; employment; earnings; Hollenbeck; Willke;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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