Evaluating hiring incentives: evidence from Italian firms
International Journal of Manpower
ISSN: 0143-7720
Article publication date: 27 April 2022
Issue publication date: 13 December 2022
Abstract
Purpose
This paper analyses the effect of a particular Active Labour Market Policy, the hiring incentives, on firms hiring policies. The effects of a programme on firms' behaviour have in fact rarely been evaluated.
Design/methodology/approach
The analysis is based on micro-data drawn from Rilevazione su Imprese Lavoro (RIL), conducted by Inapp in 2010, 2015 and 2018 on a representative sample of limited liability and partnership firms. The authors apply a policy evaluation framework to investigate the impact of the use of incentives in the short run. The authors infer the counterfactual policy scenario thanks to a survey question that asks about firms' behaviour in the absence of the incentives. The authors also control for firms' unobserved heterogeneity, including firm's fixed effects, and endogeneity issues, estimating a differences-in-differences model that exploit the longitudinal component of the RIL survey.
Findings
The authors find that the use of at least one incentive scheme in 2017 is associated with an increase in the share of newly hired of about 0.07 percentage point in the short run. Moreover, hiring incentives have a small positive relationship with the share of both young workers and temporary contracts. Finally, these results are robust to endogeneity issues.
Originality/value
The analysis provides an updated evaluation of the effectiveness of hiring incentives in Italy by focusing on firms' behaviour rather than on the evolution of individual employment. It identifies the impact by using a rich set of econometric methods as well as counterfactual analysis.
Keywords
Acknowledgements
The authors are grateful to SIE 2020 and ESPANET 2020 conference participants for the helpful comments.
Citation
Brunetti, I., Martino, E.M. and Ricci, A. (2022), "Evaluating hiring incentives: evidence from Italian firms", International Journal of Manpower, Vol. 43 No. 7, pp. 1646-1669. https://doi.org/10.1108/IJM-06-2021-0360
Publisher
:Emerald Publishing Limited
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