Analyzes the impact of the Work Opportunity Tax Credit [WOTC] on disabled veterans seeking employment.
"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. In this paper, [the author] estimate[s] 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.... [F]indings suggest that tax credits may be an effective means to reduce unemployment among disabled veterans" (p.1). (Abstractor: Author and Website Staff)

The cost per job-year is approximately $10,000.

Major Findings & Recommendations

The WOTC "tax credit introduced in 2007 that provided subsidies of up to $4,800 to employers who hired certain classes of disabled veterans increased employment among the target population by about 32,000 jobs per year at a cost of roughly $10,000 or less per job-year." (p.12) The WOTC program "increased annual wage income of the target group by 40 percent, which equates to roughly $1,000 per eligible individual." (p.12) "The effects of the credits largely accrued to older veterans, the vast majority of whom served prior to 9/11. Impacts also appear larger among those who are not from disadvantaged demographic groups." (p.9) "The present analysis suggests that [WOTC] investments may provide a valuable source of labor market support for returning and injured veterans during a period of continued labor market weakness" (p.12). (Abstractor: Author and Website Staff)