and the Caribbean. Kugler and Kugler (2009) evaluate the impact of payroll tax increases in Colombia in 1996. In particular, payroll taxes in Colombia increased from 35.5% in 1980 to 51.5% in 1996. Kugler and Kugler (2009) estimate that a 10% increase in payroll taxes reduced formal employment by between 4% and 5%. One study from Argentina which exploits the fact that payroll taxes were reduced at differential rates at 85 regions of Argentina in 1993 does not find an impact on formal employment (Cruces, Galiani and Kidyba, (2010)). In addition, they show that tax collection as a percentage of total wage income fell by almost half throughout the next decade as employment gains were null under this subsidy. In Chile, however, Gruber (1997) finds that a reduction in payroll taxes by 25% over 6 years had no effect on total employment but impacted wages.

Two meta-analyses by Card et al. (2010 and 2018) have also summarized the results of evaluations of a large number of ALMPs, including private employment subsidies. Evidence from the meta-analyses primarily comes from high-income countries, in particular Germanic, Nordic and Anglo-Saxon countries. The authors report positive employment effects of employment subsidy programs which tend to strengthen over time. In addition, they report heterogeneous effects across target groups: female participants and those drawn from the pool of long-term unemployed tend to have larger program effects than other groups. In contrast, the program estimates for youths and older workers are typically less positive than for other groups. Finally, they report that ALMPs, in particular employment subsidies, tend that to have larger impacts in periods of slow growth and higher unemployment.

A handful of papers have studied the impact of employment subsidies in the Turkish context. The most closely related study to ours is the study by Betcherman et al. (2010) who estimate the effect of two employment subsidies targeted to firms with more than 10 employees in Turkey. Similarly, as the subsidy studied in this paper, the subsidy was geographically targeted which allowed the authors to carry out a difference-in-difference estimation to estimate the effects of the subsidy. However, contrary to our study, they use aggregate data on labor market outcomes at the regional level to study those impacts. In addition, the subsidy was at the time only targeted to firms of more than 10 employees. In addition, it was applicable only to additional hires while the subsidy we study in this paper is applied to all employees. They find that the subsidies had a sizeable and positive impact on registered employment.

Uysal (2013), Ayhan (2013), and Balkan et al. (2016) study the effect of another employment subsidy in Turkey targeted to women and to youth introduced in 2018. All three papers carry out a difference-in-difference estimation to estimate the employment effects of the subsidy, with Ayhan (2013) conducting a triple difference-in-difference strategy. They use nationally representative survey data on workers from the Household Labor Force Survey (HLFS). The three studies report different results on the impact of the subsidy, although they all find that treatment effects tend to be larger for women. Uysal (2013) uses aggregate labor market data by demographic groups and emphasizes that the program has been effective for older rather than younger women, while Ayhan (2013) uses micro-level data in order to control for 6