Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298762 
Authors: 
Year of Publication: 
2021
Citation: 
[Journal:] IZA Journal of Labor Policy [ISSN:] 2193-9004 [Volume:] 11 [Issue:] 1 [Article No.:] 1 [Year:] 2021 [Pages:] 1-37
Publisher: 
Sciendo, Warsaw
Abstract: 
Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the domestic labor market. I evaluate a Swedish policy where domestic service firms receive a 50% tax deduction on labor costs. Detailed data from tax records identify all formal workers and owners of firms that receive deductions. I describe the composition of workers and owners in these firms with respect to three groups targeted by Swedish policymakers: refugees, people with low education, and people who enter the workforce from long-term unemployment. I find that the shares of refugees and long-term unemployed in the subsidized sector barely exceed the shares in the full private labor force, and fall far below the shares in industrial sectors with a predominance of elementary jobs. The share of people with low education is higher than in the full private sector and on par with other low-skilled sectors. I conclude that the tax subsidy largely failed to improve employment opportunities among the target groups. An extended analysis suggests that labor immigration from other EU countries may be a partial explanation for this. EU immigrants operate half of all subsidized firms in Sweden's largest cities and nearly exclusively employ other EU immigrants.
Subjects: 
Domestic Services
Tax Deduction
Employment
Refugee Immigrants
JEL: 
H2
J21
J23
J61
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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