Evaluating the Impact of the Post-2008 Employment Subsidy Program in Turkey

The Turkish government started an employment subsidy program in 2008 to generate new employment for younger men and all women, which are the relatively disadvantaged groups in the Turkish labor market. In this paper, we use a nationally representative micro-level dataset and a difference-in-differences approach to evaluate the effects of this subsidy program. Our results indicate that, on aggregate, the subsidy program seems to be ineffective in increasing the employment probabilities of those individuals in the target group. However, when heterogeneity is accounted for by dividing the treatment group into several sub-groups, we observe that the program has been notably effective on some of those sub-groups. In particular, we find that the increase in employment probability is more pronounced for older women, while a weaker positive effect is observed for younger women and almost no effect is detected for younger men. The effect on older women is subject to further heterogeneity : the subsidy program has increased the employment probabilities of low-educated and/or low-skill older women rather than the high-educated and/or high-skill ones.