The study reported here provides a theoretical and empirical framework for the analysis of employment tax credit policy (a government subsidy or business tax credit to firms who maintain or expand their use of labor). Various programs are examined from the standpoint of structure and implications. The programs are selective employment incentive; foreign employment credit, broad-based employment credit, and the new jobs tax credit. Literature is reviewed pertaining to economy-wide programs, including selective and broad-based employment credit programs. The effects of employment tax credits on individual firms are also examined. Then, the aggregate implications of employment tax credits are analyzed from the perspective of a complete macro-economic model of the economy. The model includes various employment tax credit parameters and accommodates several alternative methods for financing the program. Also included is an empirical evaluation of the impact of an employment tax credit on the U.S. economy and a comparison of the cost of the program with public service employment alternatives. Appended are explanations of aggregate formulation, consumption calculation formulas, and references. Flow charts, tables, and other graphics illustrate many key points. (Author/CT)