Government Incentives to Hire Young First-Time Workers in South Africa

This project will compare the efficacy of alternative modalities for delivering government wage subsidies to small firms to encourage them to hire young first-time workers in South Africa. The South African government already offers an Employment Tax Incentive (ETI), a tax credit for each eligible worker on the firm’s payroll of half the worker’s salary, claimed at the end of the tax year. Only 11 percent of firms of 1-3 workers currently use the ETI, even though small firms hire half of all formal sector workers. The government aims to increase take up of the ETI among small firms and has requested that the researchers work on an RCT to test different modalities of delivery ahead of a redesign of the policy.