6/24/2019 - Swedish companies that provide services for which tax deduction on household services can be received employ many women that are foreign born. However, relatively few of them have a refugee background. These are the main conclusines of the SNS report “Women with refugee backgrund in tax-subsidized companies” (in Swedish) Johanna Rickne, Professor of Economics.
In 2016, the Swedish government had recently appointed a new investigation that will offer proposals on how to expand tax deductions on household services, abbreviated RUT in Swedish. In this SNS report economist Johanna Rickne analyses to what extent companies that benefit from RUT employ women with a refugee background. The study uses Swedish administrative data. Rickne concludes that RUT has created a new demand for so called simple jobs, i.e. jobs with low requirements on education and language skills. After the introduction of RUT, the price on household services fell with almost the same amount as the tax deduction and has thereafter increased at the level of inflation. This indicates that the reform has had full effect.
The majority of those employed by companies subsidized by RUT, including both employees and self-employed, are women. A large part of the them are foreign born. Howeber, most of them, over 98 per cent, have a Swedish personal identity number. Hence, temporary labour immigrants from Europe seem to constitute a modest share. Moreover, only 3.0–3.3 per cent of the women have a refugee background. This is half the share compared with cleaning companies that are not specialised in the services covered by the tax deduction, for example cleaning of commersial spaces.
The study also looks at what labour market status the persons had prior to their employment in the RUT-subsidized sector. The results show that about 15 per cent found themselves in so called economic exclusion. That is a lower share than for the rest of cleaning industry as well as for the food service industry, but similar to what is found in home care services. Regarding previously unemployed, the RUT-subsidized companies had approximately the same share as the rest of the cleaning industry as well as food services, about 10 per cent, which is above the share in home care services.
– Companies specialising in tax deductible services recruit from weak groups in the labour market to a relatively large extent. However, these companies do not distinguish themselves by employing people in economic exclusion, compared with similar industries, says Johanna Rickne, Professor of Economics at Stockholm University.
The tax deduction on household services, RUT, was introduced in 2007, and constitutes a tax deduction amounting to 50 per cent of the labour cost on a selection of services carried out in private households, such as cleaning, cooking, snow clearance, various gardening services and baby sitting. According to the Swedish Tax Agency 95 per cent of the RUT tax deduction was used for cleaning services in 2015. In that year 660 000 persons made tax deductions with RUT, and 3 billion Swedish krona were disbursed through RUT.
Johanna Rickne, Professor of Economics, Stockholm University
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