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Hiring Subsidies and Firm Growth: Some New Evidence from Italy

Author

Listed:
  • Domenico Depalo

    (Banca d’Italia)

  • Eliana Viviano

    (Banca d’Italia)

Abstract

Hiring subsidies are among the most widely used policies to support employment growth for certain groups of workers or disadvantaged geographic areas. In this article, we analyze the medium-run consequences of a generous, non-targeted permanent hiring subsidy implemented throughout Italy in 2015, which was widely used by firms. The results indicate that firms benefiting from the subsidy increased in size. However, compared to other firms, the growth rate of capital–labour ratio and value added per worker were lower after the subsidy. We conclude that policies to stimulate hiring must be accompanied by other interventions to support capital accumulation.

Suggested Citation

  • Domenico Depalo & Eliana Viviano, 2024. "Hiring Subsidies and Firm Growth: Some New Evidence from Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 10(3), pages 1173-1194, November.
    • Handle: RePEc:spr:italej:v:10:y:2024:i:3:d:10.1007_s40797-023-00261-3
    DOI: 10.1007/s40797-023-00261-3
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    More about this item

    Keywords

    Hiring subsidies; Firms’ productivity; Labour market dualism;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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