Wage Subsidies and the Labor Supply of Older People: Evidence from Singapore's Workfare Income Supplement Scheme

Abstract

An increasing body of literature considers population aging and labor markets, focusing on the dynamics of older workers’ labor market participation. Singapore introduced the Workfare Income Supplement Scheme in 2007, targeting low-income, older workers. Previous studies show that labor force participation drops significantly after the age of 45. We examine whether a wage subsidy program can increase the labor supply of these older workers. Using Hong Kong as a control group in a difference-in-difference-in-difference approach, we find that this program increased labor force participation for women aged 60 to 64 by 3.1 to 5.5 percentage points.

Keywords: Labor Supply, Quasi-Natural Experiment, Wage subsidy, Singapore

JEL Classification: J14, J22