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Profitability effects of employing wage subsidized labor: The case of the Swedish New Start Jobs
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This thesis investigates the effects of employing wage subsidized labor on average productivity, labor cost and profit of the employing firms. Specifically, we study the case of the Swedish New Start Job policy; a temporary wage subsidy granted to firms for employing e.g. a long term unemployed or newly arrived immigrant. Using a matched employer-employee dataset for the years 2009-2015 and a production based methodology for estimating profitability effects of heterogeneous labor groups, our main findings point to a positive short run impact of new start workers on the average productivitylabor cost gap of the employing firms. Effect estimates indicate that a hundred percentage increase in the share of new start workers in an average employing firm, is associated with a ten percentage points increase in average profit. At levels of the subsidy and new start workers for the studied period, the results indicate that firms are more than compensated for the potentially lower productivity of the targeted workers. For the group of former new start workers who have successfully transitioned to unsubsidized employment, no differences in profitability compared to the rest of the workforce can be established. Further research is needed in order to claim causality of the results. 

Place, publisher, year, edition, pages
2018.
Keywords [en]
Subsidized employment, firms, matched employer-employee panel, productivity, New Start Jobs
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-356942OAI: oai:DiVA.org:uu-356942DiVA, id: diva2:1237522
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Available from: 2018-08-09 Created: 2018-08-09 Last updated: 2018-08-09Bibliographically approved

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  • apa
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  • de-DE
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  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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