Estimating the short run effects of South Africa's Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach
| dc.creator | Ranchhod, Vimal | |
| dc.creator | Finn, Arden | |
| dc.date | 2014-10-23T10:58:19Z | |
| dc.date | 2014-10-23T10:58:19Z | |
| dc.date | 2014-10 | |
| dc.date.accessioned | 2015-05-28T10:06:46Z | |
| dc.date.available | 2015-05-28T10:06:46Z | |
| dc.date.issued | 2015-05-28 | |
| dc.description | What effect did the introduction of the Employment Tax Incentive (ETI) have on youth employment probabilities in South Africa in the short run? The ETI came into effect on the 1st of January 2014. Its purpose is to stimulate youth employment levels and ease the challenges that many youth experience in finding their first jobs. Under the ETI, firms that employ youth are eligible to claim a deduction from their taxes due, for the portion of their wage bill that is paid to certain groups of youth employees. We utilize nationally representative Quarterly Labour Force Survey (QLFS) data for the period from January 2011 to June 2014, and implement a difference-in-differences methodology at the individual level to identify the effects of the ETI on youth employment probabilities. Our primary finding is that the ETI did not have any statistically significant and positive effects on youth employment probabilities. The point estimate from our preferred regression is -0.005 and the 95% confidence interval is from -0.017 to 0.006. We thus obtain a fairly precisely estimated 'zero effect'. We also find no evidence that the ETI has resulted in an increase in the level of churning in the labour market for youth. What our results imply is that any decrease in tax revenues that arise from the ETI are effectively accruing to firms which, collectively, would have employed most of these youth even in the absence of the ETI. We conclude with a discussion of some of the policy implications of our findings. | |
| dc.description | JEL Classification: H25, H32, J38 | |
| dc.description | The authors acknowledge support from the National Research Foundation’s Human and Social Dynamics in Development Grand Challenge. | |
| dc.identifier | Ranchhod, V., Finn, A. (2014).Estimating the short run effects of South Africa’s Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach. A Southern Africa Labour and Development Research Unit Working Paper Number 134. Cape Town: SALDRU, University of Cape Town | |
| dc.identifier | 978-1-920517-75-5 | |
| dc.identifier | http://hdl.handle.net/11090/766 | |
| dc.identifier.ris | TY - Working Paper DA - 2015-05-28 DB - OpenUCT DP - University of Cape Town KW - Youth KW - Unemployment KW - South Africa KW - Employment Tax Incentive LK - https://open.uct.ac.za PB - University of Cape Town PY - 2015 T1 - Estimating the short run effects of South Africa's Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach TI - Estimating the short run effects of South Africa's Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach UR - http://hdl.handle.net/11090/766 ER - | en_ZA |
| dc.identifier.uri | http://hdl.handle.net/11090/766 | |
| dc.language | en | |
| dc.publisher.department | SALDRU | en_ZA |
| dc.publisher.faculty | Faculty of Commerce | en_ZA |
| dc.publisher.institution | University of Cape Town | |
| dc.relation | Saldru Working Papers;134 | |
| dc.subject | Youth | |
| dc.subject | Unemployment | |
| dc.subject | South Africa | |
| dc.subject | Employment Tax Incentive | |
| dc.title | Estimating the short run effects of South Africa's Employment Tax Incentive on youth employment probabilities using a difference-in-differences approach | |
| dc.type | Working Paper | |
| uct.type.publication | Research | en_ZA |
| uct.type.resource | Working Paper | en_ZA |