TY  - RPRT
        AU  - Brown, Alessio J. G.
AU  - Merkl, Christian
AU  - Snower, Dennis J.
        TI  - Comparing the Effectiveness of Employment Subsidies
        PY  - 2007/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 2835
        UR  - https://www.iza.org/index.php/publications/dp2835
        AB  - This paper analyses theoretically and empirically how employment subsidies should be targeted. We contrast measures involving targeting workers with low incomes/abilities and targeting the unemployed under the criteria of "approximate welfare efficiency" (AWE). Thereby we can identify policies that (a) improve employment and welfare, (b) do not raise earnings inequality and (c) are self-financing. We construct a microfounded, dynamic model of hiring and separations and calibrate it with German data. The calibration shows that hiring vouchers can be AWE, while low-wage subsidies do not satisfy AWE. Furthermore, hiring vouchers targeted at the long-term unemployed are more effective than those targeted at low-ability workers.
        KW  - duration
KW  - unemployment
KW  - employment
KW  - targeting
KW  - hiring voucher
KW  - low wage subsidy
KW  - self-financing
        ER  -