Targeting Tax Relief at Youth Employment

41 Pages Posted: 6 Sep 2016

See all articles by Matthew D Webb

Matthew D Webb

Carleton University - Department of Economics

Casey Warman

Dalhousie University

Arthur Sweetman

McMaster University - Department of Economics; McMaster University - Centre for Health Economics and Policy Analysis (CHEPA); IZA Institute of Labor Economics

Abstract

Canada's Youth Hires program was a targeted employment subsidy that rebated employment insurance premiums to employers with net increases in insurable earnings for youth aged 18-24. Using a difference-in-differences approach, in each of two datasets statistically and economically significant employment impacts are observed. Most of the evidence suggests that the 2-2.4 weeks of increased employment resulted from an aggregate reduction in those not in the labour force, with at most a modest change in the unemployment rate. Many estimated effects are larger for males than females. Notably, strong evidence of displacement (substitution away from slightly older non-subsidized workers) is not observed. However, there may be a small reduction in full-time schooling for the targeted group.

Keywords: youth unemployment, displacement, unemployment insurance, unemployment, targeted tax policy

JEL Classification: J23, J65, J68

Suggested Citation

Webb, Matthew D and Warman, Casey and Sweetman, Arthur, Targeting Tax Relief at Youth Employment. IZA Discussion Paper No. 10182. Available at SSRN: https://ssrn.com/abstract=2834232

Matthew D Webb

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

HOME PAGE: http://https://sites.google.com/site/matthewdwebb/

Casey Warman

Dalhousie University ( email )

Halifax, Nova Scotia B3H 3J5
Canada

Arthur Sweetman (Contact Author)

McMaster University - Department of Economics ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

McMaster University - Centre for Health Economics and Policy Analysis (CHEPA) ( email )

1280 Main St. W
Hamilton, ON L8S 4M4
Canada

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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