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Subsidies for permanent employment in the time of Covid-19

Author

Listed:
  • Antonio Accetturo

    (Bank of Italy)

  • Francesca Modena

    (Bank of Italy)

  • Giacomo Ziglio

    (Bank of Italy)

Abstract

This paper analyses the impact of a regional policy aimed at fostering permanent employment after the COVID-19 recession. Using administrative micro data from the Italian private sector, we estimate the impact of subsidies on permanent employment by examining variations in their implementation across regions and over time. We find that, on average, the effect on the hiring of previously unemployed people is limited, but the impact on the conversion of fixed-term contracts to permanent ones is positive and sizeable. However, we observe that the average effect masks great heterogeneity across age groups, with young people - for whom subsidies were more generous - benefiting the most. Furthermore, we find no evidence that this regional policy encouraged employee poaching.

Suggested Citation

  • Antonio Accetturo & Francesca Modena & Giacomo Ziglio, 2023. "Subsidies for permanent employment in the time of Covid-19," Questioni di Economia e Finanza (Occasional Papers) 808, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_808_23
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    References listed on IDEAS

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    1. Lorenzo Cappellari & Carlo Dell’Aringa & Marco Leonardi, 2012. "Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms," Economic Journal, Royal Economic Society, vol. 122(562), pages 188-215, August.
    2. Matteo Picchio, 2008. "Temporary Contracts and Transitions to Stable Jobs in Italy," LABOUR, CEIS, vol. 22(s1), pages 147-174, June.
    3. Emanuele Ciani & Guido de Blasio, 2015. "Getting stable: an evaluation of the incentives for permanent contracts in Italy," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    4. Gaetano Basso & Domenico Depalo & Salvatore Lattanzio, 2022. "Job flows and reallocation during the recovery," Questioni di Economia e Finanza (Occasional Papers) 704, Bank of Italy, Economic Research and International Relations Area.
    5. Gaetano Basso & Adele Grompone & Francesca Modena, 2021. "The (little) reallocation potential of workers most hit by the COVID-19 crisis," Politica economica, Società editrice il Mulino, issue 2, pages 151-186.
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    More about this item

    Keywords

    Covid-19; Employment subsidies; Hiring; Place-based policy; Policy evaluation;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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