Employment effects of payroll tax subsidies

Publikation: Beitrag in FachzeitschriftForschungsartikelBeigetragenBegutachtung

Beitragende

Abstract

This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German establishments for the period 1999–2014. Particularly in small establishments (0–9 employees), subsidized Minijob employment comprises large shares of the work force, on average over 40%. For these establishments, robust evidence shows that increasing the subsidization of Minijob employment crowds out non-subsidized employment. Our results imply that Minijob employment in 2014 may have eliminated more than 0.5 million unsubsidized employment relationships just in small establishments. This represents an unintended and harmful consequence of the Minijob subsidy.

Details

OriginalspracheEnglisch
Seiten (von - bis)1201-1219
Seitenumfang19
FachzeitschriftSmall Business Economics
Jahrgang57 (2021)
Ausgabenummer3
PublikationsstatusVeröffentlicht - 12 Okt. 2020
Peer-Review-StatusJa

Schlagworte

Schlagwörter

  • C26, Crowding out effect, Displacement effect, Employment, J21, J23, J38, L26, Labor demand, Minijob, Payroll tax, Substitution effect, Wage subsidy

Bibliotheksschlagworte