Long-term unemployment and subsidies for permanent employment

Emanuele Ciani, Adele Grompone and Elisabetta Olivieri

No 1249, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We provide new evidence on the effectiveness of hiring subsidies that target the long-term unemployed, analysing a generous policy that was in force until the end of 2014 in Italy. Unlike others of its kind, this policy was particularly ambitious as it encouraged only permanent employment, which at the time still benefited from strong employment protection legislation. To achieve identification, we use a triple difference estimator, where we exploit three sources of variation: (i) the subsidy was only for the long-term unemployed and not for the short-term unemployed; (ii) it was significantly more generous in the South; (iii) it was in place until 2014. We find that the relative probability of eligible individuals in the southern regions of finding a permanent job dropped after the program terminated. This effect does not seem to be driven by substitutions over time, across contracts or among jobseekers. A cost-benefit analysis shows that the policy was globally in surplus.

Keywords: long-term unemployment; triple difference estimator; employment subsidies; place-based policy; regional disparities (search for similar items in EconPapers)
JEL-codes: H25 J08 J64 R23 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-eur, nep-lab and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1249_19

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