A policy for the (jobless) youth: the employment tax incentive

 

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dc.contributor.advisor Leibbrandt, Murray
dc.contributor.advisor Ranchhod,Vimal
dc.contributor.advisor Pirttilä, Jukka
dc.contributor.author Ebrahim, Amina
dc.date.accessioned 2021-08-12T08:54:02Z
dc.date.available 2021-08-12T08:54:02Z
dc.date.issued 2021_
dc.identifier.citation Ebrahim, A. 2021. A policy for the (jobless) youth: the employment tax incentive. . ,Faculty of Commerce ,School of Economics. http://hdl.handle.net/11427/33733 en_ZA
dc.identifier.uri http://hdl.handle.net/11427/33733
dc.description.abstract The Employment Tax Incentive (ETI) is a first of its kind wage subsidy policy in South Africa. Designed to tackle the problem of youth unemployment, the ETI differs from previous policies as it aims to address unemployment through stimulating job creation. Youth unemployment has remained above 40 percent in the past ten years and is one of South Africa's key challenges. The policy was adopted in the face of this alarmingly high level of youth unemployment and at a time where the aggregate demand was low. This thesis is an important contribution to the academic literature on the demand for young workers by providing insights into this large active labour market policy intervention. The first substantive contribution is the preparation and development of a panel dataset based on payroll tax records. The tax data panel is then used to investigate the beneficiaries of the subsidy. Large firms in retail; manufacturing and financial services sectors are responsible for the highest number and largest value of subsidy claims. The subsidy is well targeted reaching younger workers in the eligible group. The subsidy is, however, only reaching half of all subsidy eligible workers. The second contribution is the investigation of job creation at the firm level. Using a matched difference-in-differences approach, a subset of ETI firms is found to have increased their employment of youth and these results are robust to various measures of youth employment. No evidence of displacement of ineligible workers if found. The third contribution explores the labour market outcomes of individuals eligible for the subsidy. Using both tax and survey data, I estimate the intention-to-treat impacts of the ETI using a triple differences method. There are very small positive effects on earnings and entry into employment and no evidence of change on overall employment and unemployment rates for young, low-wage workers. The thesis concludes by assessing the aggregate implications from these results for understanding youth unemployment in the South African labour market and the role of active labour market policy in overcoming this problem.
dc.subject Economics
dc.title A policy for the (jobless) youth: the employment tax incentive
dc.type Doctoral Thesis
dc.date.updated 2021-08-06T07:58:43Z
dc.language.rfc3066 eng
dc.publisher.faculty Faculty of Commerce
dc.publisher.department School of Economics
dc.type.qualificationlevel Doctoral
dc.type.qualificationlevel PhD
dc.identifier.apacitation Ebrahim, A. (2021). <i>A policy for the (jobless) youth: the employment tax incentive</i>. (). ,Faculty of Commerce ,School of Economics. Retrieved from http://hdl.handle.net/11427/33733 en_ZA
dc.identifier.chicagocitation Ebrahim, Amina. <i>"A policy for the (jobless) youth: the employment tax incentive."</i> ., ,Faculty of Commerce ,School of Economics, 2021. http://hdl.handle.net/11427/33733 en_ZA
dc.identifier.vancouvercitation Ebrahim A. A policy for the (jobless) youth: the employment tax incentive. []. ,Faculty of Commerce ,School of Economics, 2021 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/33733 en_ZA
dc.identifier.ris TY - Doctoral Thesis AU - Ebrahim, Amina AB - The Employment Tax Incentive (ETI) is a first of its kind wage subsidy policy in South Africa. Designed to tackle the problem of youth unemployment, the ETI differs from previous policies as it aims to address unemployment through stimulating job creation. Youth unemployment has remained above 40 percent in the past ten years and is one of South Africa's key challenges. The policy was adopted in the face of this alarmingly high level of youth unemployment and at a time where the aggregate demand was low. This thesis is an important contribution to the academic literature on the demand for young workers by providing insights into this large active labour market policy intervention. The first substantive contribution is the preparation and development of a panel dataset based on payroll tax records. The tax data panel is then used to investigate the beneficiaries of the subsidy. Large firms in retail; manufacturing and financial services sectors are responsible for the highest number and largest value of subsidy claims. The subsidy is well targeted reaching younger workers in the eligible group. The subsidy is, however, only reaching half of all subsidy eligible workers. The second contribution is the investigation of job creation at the firm level. Using a matched difference-in-differences approach, a subset of ETI firms is found to have increased their employment of youth and these results are robust to various measures of youth employment. No evidence of displacement of ineligible workers if found. The third contribution explores the labour market outcomes of individuals eligible for the subsidy. Using both tax and survey data, I estimate the intention-to-treat impacts of the ETI using a triple differences method. There are very small positive effects on earnings and entry into employment and no evidence of change on overall employment and unemployment rates for young, low-wage workers. The thesis concludes by assessing the aggregate implications from these results for understanding youth unemployment in the South African labour market and the role of active labour market policy in overcoming this problem. DA - 2021_ DB - OpenUCT DP - University of Cape Town KW - Economics LK - https://open.uct.ac.za PY - 2021 T1 - A policy for the (jobless) youth: the employment tax incentive TI - A policy for the (jobless) youth: the employment tax incentive UR - http://hdl.handle.net/11427/33733 ER - en_ZA


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