Jump to content

The Effects of Subsidizing Social Security Contributions on Firms and Workers

07.05.2024 14:00 CET Online Seminar Series of the Economics Dept.

Talk by Güneş Aşık (TOBB University of Economics and Technology, Ankara) as part of the Research Seminar Series of the IOS Economics Department.

This paper examines the impacts of a large employment subsidy scheme covering part of employers’ social security contributions on firms and workers in Turkey. To identify causal effects, it exploits the geographically targeted implementation of the subsidy, combined with a unique reclassification of non-treated areas into treated ones in the post-estimation period, in a difference-in-difference setting. It uses rich employer-employee-linked administrative data to closely follow the dynamics of firms and workers before and after the subsidy implementation. The paper finds that the subsidy had large positive impacts on registered employment. Corroborative evidence suggests that the effects were partly driven by the formalization of existing workers as opposed to new job creation. Eligibility to the subsidy scheme also raised registered employment at the extensive margin by increasing firm entry and reducing the likelihood of firm exit. At the worker level, it significantly increased the likelihood that workers enter formal employment for the first time while reducing the probability that they exit it. Positive effects on formal employment are concentrated in medium-skilled occupations as opposed to low and high-skilled ones.

Cookie settings

In addition to technically necessary cookies, this website also uses cookies whose purpose is to analyze website access or personalize your user experience. You can revoke your consent to their use at any time here. More information on the cookies used in detail and your right of revocation can be found in the privacy policy.
Name Usage Duration
privacylayerStatus Agreement Cookie hint1 year
Name Usage Duration
_pk_idMatomo13 months
_pk_refMatomo6 months
_pk_sesMatomo30 minutes
_pk_cvarMatomo30 minutes
_pk_hsrMatomo30 minutes
_pk_testcookieMatomoEnd of session
Name Usage Duration
vimeoVimeo video embedding
youtubeYoutube video embedding