Comparing the Effectiveness of Employment Subsidies

Journal article

Publication Details

Author(s): Merkl C, Brown AJG, Snower D
Journal: Labour Economics
Publisher: Elsevier
Publication year: 2011
Volume: 18
Journal issue: 2
Pages range: 169-179
ISSN: 0927-5371
Language: English


This paper examines the implications of different types of employment subsidies for employment, welfare, and inequality. It investigates how these effects depend on what target groups the subsidies address. Our analysis focuses on policies that are “approximately welfare efficient” (AWE), i.e. policies that (a) improve employment and welfare, (b) do not raise earnings inequality and (c) are self-financing. We construct a microfounded, dynamic model of hiring and separations and calibrate it with German data. The calibration shows that hiring vouchers can be AWE, while low-wage subsidies are not AWE. Furthermore, hiring vouchers targeted at the long-term unemployed are more effective than those targeted at low-ability workers.

FAU Authors / FAU Editors

Merkl, Christian Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik

How to cite

Merkl, C., Brown, A.J.G., & Snower, D. (2011). Comparing the Effectiveness of Employment Subsidies. Labour Economics, 18(2), 169-179.

Merkl, Christian, Alessio J. G. Brown, and Dennis Snower. "Comparing the Effectiveness of Employment Subsidies." Labour Economics 18.2 (2011): 169-179.


Last updated on 2018-19-04 at 02:44