Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Introduction
- 1 Low-wage employment subsidies in a labor-turnover model of the “natural rate”
- 2 Taxes, subsidies and equilibrium labor market outcomes
- 3 Learning-by-doing versus on-the-job training: using variation induced by the EITC to distinguish between models of skill formation
- 4 Unemployment vouchers versus low-wage subsidies
- Index
4 - Unemployment vouchers versus low-wage subsidies
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Introduction
- 1 Low-wage employment subsidies in a labor-turnover model of the “natural rate”
- 2 Taxes, subsidies and equilibrium labor market outcomes
- 3 Learning-by-doing versus on-the-job training: using variation induced by the EITC to distinguish between models of skill formation
- 4 Unemployment vouchers versus low-wage subsidies
- Index
Summary
Introduction
In both Europe and the United States policy makers have been searching for new labor market measures that keep unemployment low and avoid large disparities in income. This chapter examines two policy proposals that have this aim: (1) unemployment vouchers and (2) low-wage subsidies. The unemployment vouchers are targeted exclusively at the unemployed (especially the long-term unemployed) and are provided for only a limited period of time. The low-wage subsidies, on the other hand, are granted to all low-wage earners regardless of their employment history and are of limitless duration.
Naturally, the impact effects of unemployment vouchers and low-wage subsidies are quite different. Because unemployment vouchers are targeted typically at the long-term unemployed whereas low-wage subsidies are targeted at the low-wage employed, it may be tempting to think that the two policies address different government objectives, namely, that the unemployment vouchers fight unemployment whereas the low-wage subsidies combat working poverty. This impression is misleading, however. Both policies affect the incentives to work. Thus both policies influence both unemployment and working poverty.
The unemployment vouchers are meant to reduce unemployment and inequality by stimulating the employment of those who are currently longterm unemployed; the low-wage subsidies pursue these dual objectives by promoting the employment of the working poor. Broadly speaking, the former promotes equity by reducing unemployment and the latter reduces unemployment by promoting equity.
The effectiveness of the policies in stimulating employment versus alleviating poverty depends on the degree to which their incidence falls on employers versus employees.
- Type
- Chapter
- Information
- Designing InclusionTools to Raise Low-end Pay and Employment in Private Enterprise, pp. 131 - 160Publisher: Cambridge University PressPrint publication year: 2003
- 1
- Cited by