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
Date Written: February 12, 2007
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: Suggested Citation