The Effects of Hiring Credits on Firms’ Dynamics: A Synthetic Difference-in-Differences Evaluation

Santoni Edoardo (), Patriarca Fabrizio () and Scarlato Margherita ()
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Santoni Edoardo: University of Modena and Reggio Emilia and GLO, Modena, Italy
Patriarca Fabrizio: University of Modena and Reggio Emilia and GLO, Modena, Italy
Scarlato Margherita: University of Roma Tre, Rome, Italy

The B.E. Journal of Economic Analysis & Policy, 2025, vol. 25, issue 4, 1121-1181

Abstract: Hiring credits are a long-standing labor market policy, but evidence of their impact at the firm level is limited. This paper contributes to the existing literature by providing an empirical analysis of an untargeted hiring credits policy introduced in Italy in 2015. We implement the Synthetic Control Difference-in-Differences method using administrative employer-employee data. The results show an increase in employment but at the same time a reduction in capital intensity, labor productivity and workforce quality. Furthermore, the reduction in labor costs for involved firms is not associated with an increase in their profitability.

Keywords: hiring credits; synthetic difference-in-differences; firm performance (search for similar items in EconPapers)
JEL-codes: D21 J08 J21 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejeap-2024-0450

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