#2578. Employment effects of payroll tax subsidies

March 2027publication date
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5 total number of authors per manuscript5500 $

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Journal’s subject area:
Business, Management and Accounting (all);
Economics and Econometrics;
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Abstract:
The article uses several of the wage subsidy reforms under the German Minijob program to investigate the substitution relationship and complementarity between subsidized and unsubsidized labor demand. The results show that for these establishments, an increase in subsidized employment in mini-jobs is crowding out unsubsidized employment. Research also shows that mini-jobs in 20XX may have eliminated over 0.5 million unsubsidized labor relationships in small businesses alone. This is an unintended and harmful consequence of the Minijob subsidy.
Keywords:
Crowding out effect; Displacement effect; Employment; Labor demand; Minijob; Payroll tax; Substitution effect; Wage subsidy

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