The effect of the 2008 employment support programme on young men’s labour market outcomes in Turkey: Evidence from a regression discontinuity design

Abstract

Active labour market policies (ALMPs), such as subsidies for wages, social security contributions (SSCs) and employment, are one of the most important tools of countries’ efforts to tackle unemployment. The Turkish government launched the employment subsidy programme in 2008, aiming to decrease unemployment and to encourage formal employment by subsidizing the SSCs for relatively disadvantaged groups. The aim of this study is to investigate the effects of the 2008 policy on various labour outcomes. The entire analysis relies on micro-level panel data derived by the Survey of Income and Living Conditions over the period of 2008–2011. Young men aged between 18 and 29 years are eligible to the programme. To infer causality, we apply a regression discontinuity design analysis using as the cut-off point those who are aged 30 years. The findings show that the policy of 2008 had a positive impact on employment and the probability of being employed in the formal sector and working full time.