Conference Paper
Do Employment Subsidies Have an Impact on Skill Intensity and Technological Level of Production?
No.
ERF_31_LB33
Publisher
ERF
Date
March, 2025
Topic
J. Labor and Demographic Economics
This study investigates the impact of employment subsidies on the dynamics of labor markets and production technologies in Turkey's manufacturing sector, with a focus on the additional 6-point subsidy introduced in 2016. Leveraging a difference-in-differences approach, we examine the effects of the policy on employment, capital investment, and capital intensity across firms of varying sizes. Our findings reveal that the subsidy significantly increased employment and capital accumulation, particularly for micro and small firms, while fostering greater capital intensity in small and large firms. These results suggest that employment subsidies not only alleviate labor market inefficiencies but also encourage investment in production capabilities, dispelling concerns about potential trade-offs between labor and capital. The analysis is supported by robust sensitivity checks, ensuring the validity of the findings across different specifications. By extending the evaluation of employment subsidies beyond job creation, this study contributes to the broader discourse on active labor market policies and their role in promoting sustainable growth and technological development in emerging economies.
Research Associates
Gunes Arkadas Asik
Assistant Professor of Economics, TOBB Economics and...
Authors
Caglar Yunculer
Ph.D. Candidate, TOBB Economy and Technology University,...