Hysteresis from employer subsidies

• 成果类型: Article
• 署名作者: Saez, Emmanuel; Schoefer, Benjamin; Seim, David
• 署名单位: University of California System; University of California Berkeley; Stockholm University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2021.104459
• 发表日期: 2021
• 关键词: Payroll taxes; EMPLOYMENT; hysteresis

摘要

This paper uses administrative data to analyze a large and 8-year long employer payroll tax rate cut in Sweden for young workers aged 26 or less. We replicate previous results documenting that during the earlier years of the reform, it raised youth employment among the treated workers, driven by labor demand (as workers' take-home wages did not respond). First, drawing on additional years of data, this paper then documents that the longer-run effects during the reform are twice as large as the medium-run effects. Second, we document novel labor-demand-driven hysteresis from this policy - i.e. persistent employment effects even after the subsidy no longer applies - along two dimensions. Over the lifecycle, employment effects persist even after workers age out of eligibility. Three years after the repeal, employment remains elevated at the maximal reform level in the formerly subsidized ages. These hysteresis effects more than double the direct employment effects of the reform. Discrimination against young workers in job posting fell during the reform and does not bounce back after repeal, potentially explaining our results. (c) 2021 Elsevier B.V. All rights reserved.