Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes
University of Florida
Vanderbilt University; University of Texas at Austin
February 12, 2007
Upjohn Institute Staff Working No. 07-135
Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies - the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW) - create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.
Number of Pages in PDF File: 46
Keywords: temporary help, disadvantaged, welfare, welfare-to-work, tax credit, Hamersma, Heinrich
JEL Classification: H2, I3, J3, J4
Date posted: June 19, 2007
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