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

Tattara, Giuseppe and Valentini, Marco (2008): Can employment subsidies and greater labour market flexibility increase job opportunities for youth? Revisiting the Italian On-the-job Training Program.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Labour Policy Evaluation, Youth Unemployment, Occupation and Intergenerational Mobility, Unemployment
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity

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