The employment effects of a wage subsidy for the young during an economic recovery

15 June 2023

This study investigates the employment effects of a large-scale wage subsidy programme for the young unemployed that was introduced in 2016, during a period of recovery in the Polish economy. The focus is on the question of whether the effects differed between men and women. The study employs a large population administrative data set from the unemployment register, and exploits for identification the fact that firms were only eligible to participate in the wage subsidy programme if the newly recruited worker was below age 30 and was previously unemployed. A challenge in this research is that before 2016, standard packages of active labour market programmes for all unemployed and specific programmes for unemployed below age 30 had been in place. Exploiting the long period and broad data coverage, we estimate the differential impact of the new programme using a difference-in-discontinuities design. The main finding is that over the medium term, the new wage subsidy programme was effective for low- and middle-skilled eligible young women, but not for men. We discuss the policy implications of such programmes targeting young unemployed people.

keywords: wage subsidy; youth unemployment; gender differences; difference-in-discontinuities; register data
JEL codes: 
publication year: 2023
language: english
Publications category: 
publishing series: IBS Working Paper
publication number: 04/2023
ISSN: 2451-4373
Additional information:

The research was supported by the EEA and Norway Grants Fund for Youth Employment under grant number 2017-1-008 and co-financed from the Polish funds granted for science in 2018-2022 for the implementation of international projects. We thank Karol Madoń and Adam Bielski for their outstanding research assistance. We also thank Shelly Lundberg, Andrea Weber, Arne Uhlendorff, Bence Szabo, and participants of the IZA Workshop: Inequality in Post-Transition and Emerging Economies and the Budapest Institute Research Seminar 2022 for their valuable comments.

Projects related to this publication:

Institute for Structural Research (IBS)

Institute for Structural Research (IBS), Warsaw School of Economics (SGH)

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