Subsidies for Permanent Employment in the Time of Covid-19

Abstract

This paper examines the impact of a regional policy aimed at fostering permanent employment in the aftermath of the Covid-19 recession. Using administrative micro-data from the Italian private sector, we identify the impact of the subsidies by exploiting the variation in their implementation across regions and time. We find that, on average, there was a positive and sizeable impact on conversion from fixed-term to open-ended job positions. We observe that the average effect hides some heterogeneity, with medium-high educated workers and youths benefiting more. As a further result, we show that the policy had no effect on labour poaching.