Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes

No 07-135, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies—the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)—create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.

Keywords: temporary help; disadvantaged; welfare; welfare-to-work; tax credit; Hamersma; Heinrich (search for similar items in EconPapers)
JEL-codes: H2 I3 J3 J4 (search for similar items in EconPapers)
Date: 2007-02
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Journal Article: Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes (2008)
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