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English
AutorIn 1:
Robalino, David A.
AutorIn 2:
Romero, Jose M.
AutorIn 3:
Ian Walker
HerausgeberIn 1:
Forschungsinstitut zur Zukunft der Arbeit
Titel:
Allocating Subsidies for Private Investments to Maximize Jobs Impacts
Ort:
Bonn
Verlag:
Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Jahr:
2020
Reihe:
IZA DP No. 13373
Abstract:
"(...) Governments often aim to influence the amount and sectoral allocation of private investments through explicit or implicit subsidies. The rules used to select projects to benefit from subsidies may vary, depending on the policy objective. This paper develops a general framework to allocate subsidies to private investments in the presence of jobs-linked externalities (JLEs). JLEs emerge when wages exceed the opportunity cost of labor (labor externalities), or when there are social gains from creating better jobs for some classes of worker, such as women or youth (social externalities). Like all externalities, JLEs create a gap between private and social rates of return. Investments can be socially profitable (once the corresponding JLEs are internalized) but the private returns may be too low for the firm to go ahead. JLEs help to explain why many developing countries see insufficient investment in projects that would reallocate labor towards better jobs. The concept of JLEs is well established in economic literature, but there is a need for better operational approaches to address them. Like other externalities, JLEs can be corrected using a variety of possible subsidies (such as: grants, subsidized infrastructure, credit, training, technical assistance and tax exemptions). (...)"
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URL:
 Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)