The temporary impact of permanent hiring incentives: Evidence from Italy

Abstract

This paper evaluates the short and medium-term effectiveness of hiring incentives aimed at promoting the permanent conversion of temporary contracts through social contribution exemptions. Using rich administrative data from Tuscany, providing detailed employment histories, we use difference in differences and regression discontinuity designs to exploit a unique change in eligibility criteria in 2018. We find that the incentives immediately increased the probability of conversion, with no evidence of substitution against non-eligible cohorts. However, these positive effects were short-lived and appear to reflect anticipated conversions, as we find null longer-term effects on permanent hirings.

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