Weekly Seminar Series
Michael Smart from the University of Toronto visits the department on November 25th.
Nov 22, 2022
Professor of Economics, Michael Smart, University of Toronto will visit our department in-person Friday November 25th, 2022 at 3p.m. EST.
Michael will present "The employment effects of a pandemic wage subsidy" (joint with Matthew Kronberg, Danny Leung and Huju Liu).
Abstract
We estimate the causal effects of a pandemic-era wage subsidy program in Canada on job losses and business closures. Our estimates use administrative microdata and a regression discontinuity strategy to estimate the effects of marginal changes in the wage subsidy rate. The net wage elasticity of employment was 0.11 during the first wave of the pandemic and smaller during the second wave, implying a small aggregate employment effect of the program and an estimated fiscal cost per job saved of $200,000 per year. Subsidy payments improved business balance sheets and caused a small but persistent reduction in business closure rates.
We estimate the causal effects of a pandemic-era wage subsidy program in Canada on job losses and business closures. Our estimates use administrative microdata and a regression discontinuity strategy to estimate the effects of marginal changes in the wage subsidy rate. The net wage elasticity of employment was 0.11 during the first wave of the pandemic and smaller during the second wave, implying a small aggregate employment effect of the program and an estimated fiscal cost per job saved of $200,000 per year. Subsidy payments improved business balance sheets and caused a small but persistent reduction in business closure rates.