American Economic Review Vol. 100 No. 2 2010

Wage Subsidies for Microenterprises

Suresh de Mel¹; David McKenzie²; Christopher Woodruff³

¹ Department of Economics, University of Peradeniya, Peradeniya, Sri Lanka. · ² Development Research Group, World Bank, 1818 H Street N.W., Washington, D.C. 20433. · ³ Department of Economics, University of Warwick, Coventry CV4 7AL, UK.

Abstract

Wage subsidies have long been used by Governments as part of their active labor market policies to generate employment for the disadvantaged or to sustain employment during downturns. The current global financial crisis has seen such policies return to prominence, with many developed nations using such policies to try and reduce lay-offs. Nicholas Kaldor (1936), P. Richard Layard and Stephen Nickell (1980), and Lawrence Katz (1998) lay out the economic arguments for such a policy, and discuss conditions under which a short-term subsidy might have longer-term effects on employment for the targeted individuals.

DOI

10.1257/aer.100.2.614

Volume

100

Issue

2

Pages

614-618

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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