"In Germany, targeted wage subsidies to employers are an important instrument of active labor market policy. This paper compares the wages of individuals taking up a subsidized job with those of otherwise similar individuals who found an unsubsidized job, combining propensity score matching with a differences-in-differences strategy. The results indicate for the short-run that subsidized jobs are not associated with gains or losses regarding daily wages. Nonetheless, because subsequent employment rates of subsidized persons are higher on average, we find a positive relationship between cumulated wages and subsidization."

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