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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| Format: | Working Paper |
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World Bank, Washington, DC
2016
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| 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 |
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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 |
| _version_ |
1764455777685209088 |