Can employment subsidies and greater labour market flexibility increase job opportunities for youth? Revisiting the Italian On-the-job Training Program

Giuseppe Tattara and Marco Valentini

MPRA Paper from University Library of Munich, Germany

Abstract: The CFL (On-the-job Training) programme was introduced in Italy in 1985 with the aim of reducing youth unemployment. The new programme offered employers two main advantages: it exempted them almost completely from payment of payroll taxes and it provided them with virtually the only opportunity to employ people on a basis of fixed term contracts. The paper looks at the employment impact of the programme among a subgroup of eligible workers and finds that firms taking part increased employment more than non-participating firms by almost 5%. Employers had a strong positive reaction to the tax subsidies and to the softening of the rigid employment code. The overall effect of the programme on youth employment was however limited, registering only a 1% increase, mainly because about 80% of firms never participated.

Keywords: Labour Policy Evaluation; Youth Unemployment; Occupation and Intergenerational Mobility; Unemployment (search for similar items in EconPapers)
JEL-codes: J24 J41 J63 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Can employment subsidies and greater labour market flexibility increase job opportunities for youth?: revisiting the Italian on-the-job training programme (2009)
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