The Effects of Hiring Tax Credits on Employment of Disabled Veterans

Abstract

Listen

Translate article

Abstract : Since the large increase in unemployment brought about by the recession of 2007 2009, policymakers have expressed considerable concern regarding economic problems faced by veterans, particularly those who have been disabled as a result of service during the post-9/11 era. Recently, policymakers from both major parties supported expansions to tax credit programs that reward businesses that offer jobs to unemployed veterans, culminating in the November 2011 passage of the VOW to Hire Heroes Act (Pub. L. 112-56) containing several new credits. This legislation follows in the wake of expansions to the Work Opportunity Tax Credit (WOTC) program enacted in 2007 and 2009 that offered financial incentives to employers who hired certain groups of veterans, including those with service-connected disabilities. Despite the widespread perception among policymakers that tax credits can improve the job prospects of certain segments of the veteran population, including the disabled, there has been little rigorous empirical research establishing whether such tax credits are effective at actually increasing the employment of targeted groups.2 In this paper, I estimate the employment effects of a 2007 WOTC expansion that made tax credits of up to $4,800 available to employers who hired disabled veterans who were recently discharged or unemployed for more than six months. Using a differences-in-differences, triple-differences, and Since the large increase in unemployment brought about by the recession of 2007 2009, policymakers have expressed considerable concern regarding economic problems faced by veterans, particularly those who have been disabled as a result of service during the post-9/11 era. Recently, policymakers from both major parties supported expansions to tax credit programs that reward businesses that offer jobs to unemployed veterans, culminating in the November 2011 passage of the VOW to Hire Heroes Act (Pub. L. 112-56) containing several new credits.