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| | | Robalino, David A. | | Romero, Jose M. | | Ian Walker | | Forschungsinstitut zur Zukunft der Arbeit | | | Allocating Subsidies for Private Investments to Maximize Jobs Impacts | | | Bonn | | Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA) | | 2020 | | IZA DP No. 13373 | | | "(...) 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). (...)" | | | hier klicken (PDF 329 KB) | | Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA) | |
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