The research here proposed consists in the evaluation of the impact of Law 407/90, and of its end, on hirings of long-term-unemployed. The afore-mentioned policy was implemented from 1990 to 2014 in Italy and consisted, among other things, in tax credits to employers hiring long term unemployed with a permanent contract. Even though the evaluation of an ended law may appear anachronistic, it isn't. Indeed, its end is highly informative, for multiple reasons. Its analysis would give a contribution to recent debates on italian labour policies, to the literature on labour and to counterfactual methods.
Its contribution in the first mentioned field, would consist in additional information on 2015 Legge Stabilità. Indeed, this law mandated the end of Law 407/90. Hence its consequences can be ascribed to the 2015 policy. To our knowledge, this would be the first quantitative and reliable study focusing on this aspect of 2015 Legge Stabilità.
The contributions of this study in the second field would be multiple. It would give a contribution to the literature on wage subsidies to targeted groups of unemployed. Indeed, this would be the first study about law 407/90, and in general about a policy targeting long-term unemployed implemented in Italy. The second contribution to literature on labour, concerns the estimation of the stigma affecting long term unemployed. According to theoretical literature, most of the duration dependence in unemployment is due to the stigma affecting them. Using a counterfactual model and exploiting the fact that the end of the law corresponded with the implementation of a law which generalized wage subsidies to all workers, we would be able to identify and estimate the stigma using an approach that has never been used before. This would require the implementation of an innovative methodology as well. In particulair, a variation of usual duration dependence models would be implemented.
This research would be innovative for multiple reasons. The biggest innovations are, without any doubt, in the proposed methodologies. Indeed, to our knowledge, it would be the first time a counterfactual method is used to estimate the stigma of long term unemployed. Moreover, it would be the first time a model mixing duration dependence model and RDD (it can be called duration dependence discontinuity design) is implemented.
The research would give an important contribution from the point of view of empirical knowledge as well. To our knowledge, it would be the first time the stigma of long term unemployed in Italy is estimated. It would be the first time Law 407/90, and in general a policy of tax credits targeting long term unemployed in Italy, is evaluated. Indeed, to our knowledge, there is only one evaluation of a tax credits policy targeting a particular group of unemployed implemented in Italy [1]. Nevertheless, it concerns another vulnerable group of unemployed. It would be the first time this side effect of 2015 Finanziaria's subsidies are considered and studied. Indeed, most of the literature focused on the general effects of wage subsidies.
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