Contingent wage subsidy

Prospective Analysis of a Wage Subsidy for Cape Town Youth

Persistently high youth unemployment is one of the most pressing problems in South Africa. The South African government has proposed an employer wage subsidy to address the issue. We prospectively analyze such a policy. 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...

Heterogeneous Treatment and Self-Selection in a Wage Subsidy Experiment

Heterogeneous Treatment and Self-Selection in a Wage Subsidy Experiment The Self-Sufficiency Project (SSP) is a research and demonstration project that offered a generous time-limited income supplement to randomly selected welfare applicants under two conditions. The first, the eligibility condition, required that they remain on welfare for at least twelve months. The second, the qualification ...

The Work and Human Investment Incentives of Negative Income Tax and Wage Subsidy

The Youth Wage Subsidy in South Africa Response of the Congress of South African Trade Unions

1. The National Treasury document relies on international studies to justify its proposals on youth wage subsidies, or even employment subsidies. But careful reading of those studies reveals that they lean towards the COSATU position. Based on Treasury’s own literature which they used to propose this ill-conceived policy, we have shown that there are no empirical grounds for this policy. The ir...

Funding Higher Education and Wage Uncertainty: Income Contingent Loan versus Mortgage Loan

In a world where graduate incomes are uncertain and higher education is financed through governmental loans, we build a theoretical model to show whether an income contingent loan (ICL) or a mortgage loan (ML) is preferred for higher levels of uncertainty. Assuming a single lifetime shock on graduate incomes, we compare the individual expected utilities under the two loan schemes, for both risk...