The Employment Tax Incentive – a reform proposal

Andrew R Donaldson
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Andrew R Donaldson: SALDRU, University of Cape Town

No 310, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town

Abstract: South Africa’s Youth Employment Incentive is described in this paper and its impact is reviewed. It is argued that in the context of South Africa’s deep structural unemployment, neither the empirical evidence nor the underlying theory supports the current narrowly targeted wage subsidy design. Drawing in part on comparison with the US earned income tax credit, recommendations are outlined for reform of the current youth incentive in favour of a broad-based employment subsidy. Illustrative cost estimates for alternative design parameters are set out, together with a concluding note on financing considerations.

Keywords: Wage subsidies; employment policy; tax incentives; South Africa (search for similar items in EconPapers)
JEL-codes: H25 J38 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ldr:wpaper:310

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