Policies to create employment through a wage subsidy has had mixed results internationally. This paper examines the incidence and employment impacts of the Employment Tax Incentive, a South African wage subsidy system that is targeted at the employers of low-wage youth.

The paper uses a triple differences strategy and both survey and administrative data, covering the universe of formally employed South African workers. The results reveal that the system has not had a positive influence on the employment rate of eligible workers. Monthly earnings have increased in the region where the subsidy is the greatest. This is partly explained by an increase in the hiring rate for young workers, but it may also suggest that the incidence of the subsidy is partly on workers.

About the Presenter

Amina Ebrahim is a Research Associate at UNU-WIDER focusing on tax administrative data. She is pursuing her PhD in Economics at the University of Cape Town. Her research interests include development, labour and public economics.