Prospective analysis of a wage subsidy for Cape Town youth

• 成果类型: Article
• 署名作者: Levinsohn, James; Pugatch, Todd
• 署名单位: Yale University; Oregon State University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2014.02.006
• 发表日期: 2014
• 页码: 169-183
• 关键词: job search; Reservation wages; labor supply; youth unemployment; South Africa

摘要

Persistently high youth unemployment is one of the most pressing problems in South Africa. We prospectively analyze an employer wage subsidy targeted at youth, a policy recently enacted by the South African government to address the issue. Recognizing that a credible estimate of the policy's impact requires a model of the labor market that itself generates high unemployment in equilibrium, we estimate a structural search model that incorporates both observed heterogeneity and measurement error in wages. Using the model to simulate the policy, we find that a R1000/month wage subsidy paid to employers leads to an increase of R596 in mean accepted wages and a decrease of 12 percentage points in the share of youth experiencing long-term unemployment. (C) 2014 Elsevier B.V. All rights reserved.