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Does subsidized employment help redundant workers to get a good quality job? A causal assessment of the Mobility Lists Programme in Italy.

Buligescu Bianca, Borghans Lex, Dupuy Arnaud
Graduate School Of Governance, The Netherlands

The topic of this paper is extremely relevant, for present times when economies are still restructuring after the financial crisis. This paper investigates whether a particular policy instrument, subsidized employment, can help redundant workers to reintegrate in the economy. Therefore this paper investigates the following research question: "Do participants in an active labor market policy increase their chances of employment or are they stigmatized by potential employers?". The paper focuses on the effects of Mobility Lists programme in Italy, on wages and employment length of redundant workers using three administrative datasets for the Veneto region in Italy over a period of a decade (1991-2001). The data has been merged using a probabilistic record matching applied to job spells. The main contribution of this paper to the existing literature is measuring the local average treatment effect of the programme by exploiting a discontinuity in the firm size. We use a fuzzy regression discontinuity design to investigate the effect of the programme for a sub-sample of collectively dismissed workers on the length of the first employment spell and wage. Based on the analysis, we discuss the theoretical implications of the programme from a human capital theory and signaling perspective. Several policy recommendations are made.

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