TY  - RPRT
        AU  - Herget, Anna
AU  - Riphahn, Regina T.
        TI  - Phasing Out Payroll Tax Subsidies
        PY  - 2024/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17587
        UR  - https://www.iza.org/index.php/publications/dp17587
        AB  - Many countries subsidize low-income employments or small jobs. These subsidies and their phasing out can generate labor market frictions and distort incentives. The German Minijob program subsidizes low-income jobs. It generates a 'Minijob trap' with substantial bunching along the earnings distribution. Since 2003, the newly introduced Midijob subsidy aims to reduce the Minijob-induced notch in the net earnings distribution. Midijobs reduce payroll taxes for employments above the Minijob earnings ceiling. We investigate whether introducing Midijobs reduced the Minijob trap. We apply a regression discontinuity design using administrative data and a difference-in-differences estimation using survey data. While in both cases our results show a small positive overall effect of Midijobs on transitions out of Minijobs, they are effective only for a narrow treatment group.
        KW  - regression discontinuity
KW  - difference-in-differences
KW  - causal effects
KW  - payroll tax subsidy
KW  - Minijobs
KW  - Midijobs
KW  - SOEP
KW  - SIAB
        ER  -