Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico

The rise in unemployment during an economic crisis poses a significant concern to policy makers. This paper measures the effect of a program in Mexico that granted firms in certain industries wage subsidies if they decided to keep their workers ins...

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Bibliographic Details
Main Author: Bruhn, Miriam
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2016
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2016/03/26085106/can-wage-subsidies-boost-employment-wake-economic-crisis-evidence-mexico
http://hdl.handle.net/10986/24149
id okr-10986-24149
recordtype oai_dc
spelling okr-10986-241492021-04-23T14:04:19Z Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico Bruhn, Miriam FIRING RESTRICTIONS JOBS PRODUCING GOODS UNEMPLOYMENT EMPLOYMENT LABOR MARKET TRAINING COSTS WORKERS WAGE‐SUBSIDY SEVERANCE PAYMENTS LABOR MARKET PROGRAMS WAGES WAGE SUBSIDY SKILLED WORKERS MINIMUM WAGE ACTIVE LABOR MARKET PROGRAMS WAGE SUBSIDIES TRAINING COSTS JOB TENURE LABOR FORCE PROBIT REGRESSION WORK SCHEDULE UNEMPLOYED WORKERS JOB FIRING RESTRICTIONS RISING UNEMPLOYMENT LABOR STATISTICS PRIVATE SECTOR MINIMUM WAGES DISPLACEMENT EFFECT WAGE SUBSIDY PROGRAM LABOR MARKET POLICIES EMPLOYMENT TRENDS RISING UNEMPLOYMENT ACTIVE LABOR WAGE SUBSIDY PROGRAM WAGE‐SUBSIDY PROGRAM EMPLOYMENT LEVELS MANUFACTURING INDUSTRIES LABOR MARKET LABOR MARKET POLICIES EMPLOYMENT LEVELS UNEMPLOYED WORKERS EMPLOYMENT SUBSIDIES DISPLACEMENT EFFECTS CREATING JOBS DISPLACEMENT WORKER EMPLOYEE ACTIVE LABOR MARKET MANUFACTURING INDUSTRY COLLEGE GRADUATES UNEMPLOYED JOB LOSS WAGE SUBSIDIES INFORMAL EMPLOYMENT MEDICAL CARE LABOUR EMPLOYMENT RETENTION LABOR DISADVANTAGED WORKERS DISADVANTAGED WORKERS TOTAL EMPLOYMENT EMPLOYMENT PROSPECTS WAGE SUBSIDY EMPLOYMENT PROSPECTS WAGE EMPLOYMENT SUBSIDIES INDUSTRIES WAGE EMPLOYMENT MINIMUM WAGES MANUFACTURING INDUSTRIES EMPLOYEES The rise in unemployment during an economic crisis poses a significant concern to policy makers. This paper measures the effect of a program in Mexico that granted firms in certain industries wage subsidies if they decided to keep their workers instead of letting them go during the recent economic crisis. The analysis uses monthly administrative data on employment at the industry level, along with propensity score matching to construct groups of eligible and ineligible durable goods manufacturing industries that display statistically identical pre-program trends in employment. Difference-in-difference results show a positive but not statistically significant effect of the wage subsidies on employment during the program’s eight-month duration, ranging from 5.7 to 13.2 percent in magnitude, depending on the specification. The size of the effect increases to 24 percent after the program ended and the results indicate that employment after the program recovered faster in eligible industries than in ineligible industries. 2016-04-26T16:30:04Z 2016-04-26T16:30:04Z 2016-03 Working Paper http://documents.worldbank.org/curated/en/2016/03/26085106/can-wage-subsidies-boost-employment-wake-economic-crisis-evidence-mexico http://hdl.handle.net/10986/24149 English en_US Policy Research Working Paper;No. 7607 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Mexico
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic FIRING RESTRICTIONS
JOBS
PRODUCING GOODS
UNEMPLOYMENT
EMPLOYMENT
LABOR MARKET
TRAINING COSTS
WORKERS
WAGE‐SUBSIDY
SEVERANCE PAYMENTS
LABOR MARKET PROGRAMS
WAGES
WAGE SUBSIDY
SKILLED WORKERS
MINIMUM WAGE
ACTIVE LABOR MARKET PROGRAMS
WAGE SUBSIDIES
TRAINING COSTS
JOB TENURE
LABOR FORCE
PROBIT REGRESSION
WORK SCHEDULE
UNEMPLOYED WORKERS
JOB
FIRING RESTRICTIONS
RISING UNEMPLOYMENT
LABOR STATISTICS
PRIVATE SECTOR
MINIMUM WAGES
DISPLACEMENT EFFECT
WAGE SUBSIDY PROGRAM
LABOR MARKET POLICIES
EMPLOYMENT TRENDS
RISING UNEMPLOYMENT
ACTIVE LABOR
WAGE SUBSIDY PROGRAM
WAGE‐SUBSIDY PROGRAM
EMPLOYMENT LEVELS
MANUFACTURING INDUSTRIES
LABOR MARKET
LABOR MARKET POLICIES
EMPLOYMENT LEVELS
UNEMPLOYED WORKERS
EMPLOYMENT SUBSIDIES
DISPLACEMENT EFFECTS
CREATING JOBS
DISPLACEMENT
WORKER
EMPLOYEE
ACTIVE LABOR MARKET
MANUFACTURING INDUSTRY
COLLEGE GRADUATES
UNEMPLOYED
JOB LOSS
WAGE SUBSIDIES
INFORMAL EMPLOYMENT
MEDICAL CARE
LABOUR
EMPLOYMENT RETENTION
LABOR
DISADVANTAGED WORKERS
DISADVANTAGED WORKERS
TOTAL EMPLOYMENT
EMPLOYMENT PROSPECTS
WAGE SUBSIDY
EMPLOYMENT PROSPECTS
WAGE EMPLOYMENT SUBSIDIES
INDUSTRIES
WAGE EMPLOYMENT
MINIMUM WAGES
MANUFACTURING INDUSTRIES
EMPLOYEES
spellingShingle FIRING RESTRICTIONS
JOBS
PRODUCING GOODS
UNEMPLOYMENT
EMPLOYMENT
LABOR MARKET
TRAINING COSTS
WORKERS
WAGE‐SUBSIDY
SEVERANCE PAYMENTS
LABOR MARKET PROGRAMS
WAGES
WAGE SUBSIDY
SKILLED WORKERS
MINIMUM WAGE
ACTIVE LABOR MARKET PROGRAMS
WAGE SUBSIDIES
TRAINING COSTS
JOB TENURE
LABOR FORCE
PROBIT REGRESSION
WORK SCHEDULE
UNEMPLOYED WORKERS
JOB
FIRING RESTRICTIONS
RISING UNEMPLOYMENT
LABOR STATISTICS
PRIVATE SECTOR
MINIMUM WAGES
DISPLACEMENT EFFECT
WAGE SUBSIDY PROGRAM
LABOR MARKET POLICIES
EMPLOYMENT TRENDS
RISING UNEMPLOYMENT
ACTIVE LABOR
WAGE SUBSIDY PROGRAM
WAGE‐SUBSIDY PROGRAM
EMPLOYMENT LEVELS
MANUFACTURING INDUSTRIES
LABOR MARKET
LABOR MARKET POLICIES
EMPLOYMENT LEVELS
UNEMPLOYED WORKERS
EMPLOYMENT SUBSIDIES
DISPLACEMENT EFFECTS
CREATING JOBS
DISPLACEMENT
WORKER
EMPLOYEE
ACTIVE LABOR MARKET
MANUFACTURING INDUSTRY
COLLEGE GRADUATES
UNEMPLOYED
JOB LOSS
WAGE SUBSIDIES
INFORMAL EMPLOYMENT
MEDICAL CARE
LABOUR
EMPLOYMENT RETENTION
LABOR
DISADVANTAGED WORKERS
DISADVANTAGED WORKERS
TOTAL EMPLOYMENT
EMPLOYMENT PROSPECTS
WAGE SUBSIDY
EMPLOYMENT PROSPECTS
WAGE EMPLOYMENT SUBSIDIES
INDUSTRIES
WAGE EMPLOYMENT
MINIMUM WAGES
MANUFACTURING INDUSTRIES
EMPLOYEES
Bruhn, Miriam
Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
geographic_facet Latin America & Caribbean
Mexico
relation Policy Research Working Paper;No. 7607
description The rise in unemployment during an economic crisis poses a significant concern to policy makers. This paper measures the effect of a program in Mexico that granted firms in certain industries wage subsidies if they decided to keep their workers instead of letting them go during the recent economic crisis. The analysis uses monthly administrative data on employment at the industry level, along with propensity score matching to construct groups of eligible and ineligible durable goods manufacturing industries that display statistically identical pre-program trends in employment. Difference-in-difference results show a positive but not statistically significant effect of the wage subsidies on employment during the program’s eight-month duration, ranging from 5.7 to 13.2 percent in magnitude, depending on the specification. The size of the effect increases to 24 percent after the program ended and the results indicate that employment after the program recovered faster in eligible industries than in ineligible industries.
format Working Paper
author Bruhn, Miriam
author_facet Bruhn, Miriam
author_sort Bruhn, Miriam
title Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
title_short Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
title_full Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
title_fullStr Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
title_full_unstemmed Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? : Evidence from Mexico
title_sort can wage subsidies boost employment in the wake of an economic crisis? : evidence from mexico
publisher World Bank, Washington, DC
publishDate 2016
url http://documents.worldbank.org/curated/en/2016/03/26085106/can-wage-subsidies-boost-employment-wake-economic-crisis-evidence-mexico
http://hdl.handle.net/10986/24149
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