Wages, Employment and Tenure of Temporarily Subsidized Workers: Does the Industry Matter?

34 Pages Posted: 26 Jul 2010

See all articles by Gesine Stephan

Gesine Stephan

Institute for Employment Research (IAB); University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg; IZA Institute of Labor Economics

Abstract

This paper explores whether wage, employment and tenure outcomes of workers taking up a job subsidized by the German Federal Employment Agency differ by industry. The analysis utilizes administrative data and statistical matching techniques; it covers an observation period of 3.5 years. First, we conduct a within-industry comparison of temporarily subsidized and otherwise similar unsubsidized workers. The findings show for most industries that subsidized workers had similar short-run wages, but fared significantly better in the longer run. Second, we compare labor market outcomes of subsidized workers within each industry with those of similar subsidized workers in other industries. The main result is that cumulated wages of workers would not have differed significantly, if they had been hired in another industry instead. However, we find significant differences in short-term wages, employment and tenure outcomes across industries. Finally, from a fiscal point of view it seems more advantageous to subsidize workers hired in industries that are less subject to demand fluctuations.

Keywords: wage subsidies, industry-specific effects, program evaluation

JEL Classification: J31, J38, J58

Suggested Citation

Stephan, Gesine, Wages, Employment and Tenure of Temporarily Subsidized Workers: Does the Industry Matter?. IZA Discussion Paper No. 5078, Available at SSRN: https://ssrn.com/abstract=1648363 or http://dx.doi.org/10.2139/ssrn.1648363

Gesine Stephan (Contact Author)

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Lange Gasse 20
Nuremberg, 90403
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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