A study examined the effect of the Targeted Jobs Tax Credit (TJTC) on a variety of employer- and employment-related outcomes. Data were collected from two databases and a set of case studies. Although most employers report having heard of TJTC, only a small number of firms were actually participating in the program. TJTC did not appear to change hiring practices, and employers systematically underestimated the expected productivity of TJTC-eligible persons and thus often incorrectly believed that they were lowering hiring standards by hiring these workers. Although most employers were surprised by how well TJTC-eligible workers performed on the job, they did not revise their opinions about the average productivity of these workers. The TJTC could be improved by increasing the effectiveness of TJTC referral services, tightening eligibility determination, increasing funding for administration, and limiting eligibility to referrals by client-centered agencies. (Appendixes include a brief description of the first wave of the employer survey, the employer questionnaire, the Poisson model of TJTC participation, the case study interview form, and the TJTC questionnaire administered by the interviewer.) (MN)