IDEAS home Printed from https://ideas.repec.org/a/spr/italej/v10y2024i3d10.1007_s40797-023-00261-3.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40797-023-00261-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40797-023-00261-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tito Boeri & Andrea Ichino & Enrico Moretti & Johanna Posch, 2021. "Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces [“Regional Wage Disparities and Migration.”]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3249-3292.
    2. Saez, Emmanuel & Schoefer, Benjamin & Seim, David, 2021. "Hysteresis from employer subsidies," Journal of Public Economics, Elsevier, vol. 200(C).
    3. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    4. Pierre Cahuc & Stéphane Carcillo & Thomas Le Barbanchon, 2019. "The Effectiveness of Hiring Credits," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 593-626.
    5. Alberto Abadie & Susan Athey & Guido W Imbens & Jeffrey M Wooldridge, 2023. "When Should You Adjust Standard Errors for Clustering?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(1), pages 1-35.
    6. Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, January.
    7. Enrico Rubolino, 2022. "Taxing the Gender Gap: Labor Market Effects of a Payroll Tax Cut for Women in Italy," Cahiers de Recherches Economiques du Département d'économie 22.01, Université de Lausanne, Faculté des HEC, Département d’économie.
    8. Boeri, Tito & Garibaldi, Pietro, 2019. "A tale of comprehensive labor market reforms: Evidence from the Italian jobs act," Labour Economics, Elsevier, vol. 59(C), pages 33-48.
    9. Garibaldi, Pietro. & Taddei, Filippo., 2013. "Italy : a dual labour market in transition: country case studies on labour market segmentation," ILO Working Papers 994816943402676, International Labour Organization.
    10. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
    11. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
    12. Paolo Sestito & Eliana Viviano, 2018. "Firing costs and firm hiring: evidence from an Italian reform," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 101-130.
    13. 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.
    14. Guido W. Imbens, 2015. "Matching Methods in Practice: Three Examples," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 373-419.
    15. Alessio J. G. Brown, 2015. "Can hiring subsidies benefit the unemployed?," IZA World of Labor, Institute of Labor Economics (IZA), pages 163-163, June.
    16. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    17. repec:hal:spmain:info:hdl:2441/2rcfhie1t29t8ri11cvv60qku0 is not listed on IDEAS
    18. Desiere Sam & Cockx Bart, 2022. "How effective are hiring subsidies in reducing long-term unemployment among prime-aged jobseekers? Evidence from Belgium," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-38, January.
    19. Enrico Rubolino, 2022. "Taxing the Gender Gap: Labor Market Effects of a Payroll Tax Cut for Women in Italy," CESifo Working Paper Series 9671, CESifo.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonio Accetturo & Giuseppe Albanese & Maria Paola & Roberto Torrini, 2024. "The North–South Gap: Economic Development and Public Intervention," 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 957-975, November.
    2. Santoni, Edoardo & Patriarca, Fabrizio & Scarlato, Margherita, 2024. "The effects of hiring credits on firm dynamics: a synthetic difference-in-differences evaluation," GLO Discussion Paper Series 1546, Global Labor Organization (GLO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Santoni, Edoardo & Patriarca, Fabrizio & Scarlato, Margherita, 2024. "The effects of hiring credits on firm dynamics: a synthetic difference-in-differences evaluation," GLO Discussion Paper Series 1546, Global Labor Organization (GLO).
    2. Albanese, Andrea & Cockx, Bart & Dejemeppe, Muriel, 2024. "Long-term effects of hiring subsidies for low-educated unemployed youths," Journal of Public Economics, Elsevier, vol. 235(C).
    3. Francesconi, Marco & Sonedda, Daniela, 2024. "Does Weaker Employment Protection Lower the Cost of Job Loss?," IZA Discussion Papers 17374, Institute of Labor Economics (IZA).
    4. Ernst, Ekkehard & Merola, Rossana & Reljic, Jelena, 2024. "Fiscal policy instruments for inclusive labour markets: A review," GLO Discussion Paper Series 1406, Global Labor Organization (GLO).
    5. Berger, Johannes & Köppl-Turyna, Monika, 2021. "Hiring credits - Einstellungsförderungen: Was der Staat nun für den Arbeitsmarkt tun kann," Policy Notes 45, EcoAustria – Institute for Economic Research.
    6. Albanese, Andrea & Cockx, Bart & Dejemeppe, Muriel, 2022. "Long-Term Effects of Hiring Subsidies for Unemployed Youths - Beware of Spillovers," GLO Discussion Paper Series 1168, Global Labor Organization (GLO).
    7. Enrico Rubolino, 2022. "Taxing the Gender Gap: Labor Market Effects of a Payroll Tax Cut for Women in Italy," Cahiers de Recherches Economiques du Département d'économie 22.01, Université de Lausanne, Faculté des HEC, Département d’économie.
    8. Nivala, Annika, 2024. "(No) Effects of Subsidizing the First Employee: Evidence of a Low Take-up Puzzle Among Firms," Working Papers 166, VATT Institute for Economic Research.
    9. Domenico Depalo & Salvatore Lattanzio, 2023. "The increase in earnings inequality and volatility in Italy: the role and persistence of atypical contracts," Questioni di Economia e Finanza (Occasional Papers) 801, Bank of Italy, Economic Research and International Relations Area.
    10. Cockx, Bart & Desiere, Sam, 2024. "Labour costs and the decision to hire the first employee," European Economic Review, Elsevier, vol. 170(C).
    11. d'Agostino, Giorgio & Patriarca, Fabrizio & Pieroni, Luca & Scarlato, Margherita, 2020. "The perverse effects of hiring credits as a place-based policy: Evidence from Southern Italy," MPRA Paper 102240, University Library of Munich, Germany.
    12. Bermúdez-Barrezueta, Natalia & Desiere, Sam & Tarullo, Giulia, 2025. "Hiring Subsidies and Temporary Work Agencies," IZA Discussion Papers 17616, Institute of Labor Economics (IZA).
    13. Muriel DEJEMEPPE & Matthieu DELPIERRE & Mathilde POURTOIS, 2024. "Hiring subsidies for low-educated unemployed youths are ineffective in a tight labor market," LIDAM Discussion Papers IRES 2024009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    14. Natalia Bermúdez-Barrezueta & Sam Desiere & Giulia Tarullo, 2025. "Hiring subsidies and temporary work agencies," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 25/1103, Ghent University, Faculty of Economics and Business Administration.
    15. Amina Ebrahim & Jukka Pirttilä, 2022. "A policy for the jobless youth in South Africa: Individual impacts of the Employment Tax Incentive," WIDER Working Paper Series wp-2022-124, World Institute for Development Economic Research (UNU-WIDER).
    16. Batut, Cyprien, 2021. "The longer term impact of hiring credits. Evidence from France," Labour Economics, Elsevier, vol. 72(C).
    17. Fernandez-Cornejo, Jorge & Wechsler, Seth James, 2012. "Fifteen Years Later: Examining the Adoption of Bt Corn Varieties by U.S. Farmers," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124257, Agricultural and Applied Economics Association.
    18. D'Addio, Anna Cristina & De Greef, Isabelle & Rosholm, Michael, 2002. "Assessing Unemployment Traps in Belgium Using Panel Data Sample Selection Models," IZA Discussion Papers 669, Institute of Labor Economics (IZA).
    19. Myck, Michal & Nici?ska, Anna & Morawski, Leszek, 2009. "Count Your Hours: Returns to Education in Poland," IZA Discussion Papers 4332, Institute of Labor Economics (IZA).
    20. Paul Ellickson & Sanjog Misra, 2012. "Enriching interactions: Incorporating outcome data into static discrete games," Quantitative Marketing and Economics (QME), Springer, vol. 10(1), pages 1-26, March.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:italej:v:10:y:2024:i:3:d:10.1007_s40797-023-00261-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.