Publication Date

Winter 1991

Abstract

The Targeted Jobs Tax Credit (TJTC) is probably the most outstanding example of a generous entitlement program with a very low participation rate. Only about 10 percent of eligible youth hired are claimed as a tax credit by their employers. The causes of the low participation rates are analyzed by estimating a Poisson model of the number of TJTC-eligibles hired and certified during 1980, 1981, and 1982. Information costs, both fixed and variable, are found to be key barriers to TJTC participation. The cost- effectiveness of TJTC is low because of the stigma attached and the very high recruitment costs of hiring additional TJTC-eligibles. Because employers find it relatively cheap to certify after the fact eligible new employees who would have been hired anyway, this passive mode of participating in TJTC predominates.

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Suggested Citation
Bishop, J. & Kang, S. (1991). Applying for entitlements: Employers and the Targeted Jobs Tax Credit [Electronic version]. Retrieved [insert date] from Cornell University, ILR school site: http://digitalcommons.ilr.cornell.edu/articles/272/

Required Publisher Statement
©1991 Wiley-Blackwell Publishing. Reprinted with permission. Final version published as Bishop, J. & Kang, S. (1991). Applying for entitlements: Employers and the Targeted Jobs Tax Credit. Journal of Policy Analysis and Management, 10(1), 24-45.

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