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Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes

Upjohn Institute Staff Working No. 07-135

46 Pages Posted: 19 Jun 2007  

Sarah Hamersma

University of Florida

Carolyn Heinrich

Vanderbilt University; University of Texas at Austin

Date Written: February 12, 2007

Abstract

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.

Keywords: temporary help, disadvantaged, welfare, welfare-to-work, tax credit, Hamersma, Heinrich

JEL Classification: H2, I3, J3, J4

Suggested Citation

Hamersma, Sarah and Heinrich, Carolyn, Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes (February 12, 2007). Available at SSRN: https://ssrn.com/abstract=995166 or http://dx.doi.org/10.2139/ssrn.995166

Sarah Hamersma (Contact Author)

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Carolyn Heinrich

Vanderbilt University ( email )

Nashville, TN 37240
United States
615-322-1169 (Phone)

HOME PAGE: http://peabody.vanderbilt.edu/bio/carolyn-heinrich

University of Texas at Austin ( email )

2315 Red River St.
Austin, TX 78713
United States
512-471-3200 (Phone)

HOME PAGE: http://www.utexas.edu/lbj/directory/faculty/carolyn-heinrich

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