Employment Subsidies, Informal Economy and Women's Transition into Work in a Depressed Area: Evidence from a Matching Approach

Adriana Di Liberto,Manuela Deidda,Giovanni Sulis,Marta Foddi

doi:10.2139/ssrn.2341511

Adriana Di Liberto, Manuela Deidda + Show 2 more

Open Access

https://doi.org/10.2139/ssrn.2341511

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Abstract

We analyse the effects of an active labour market program for disadvantaged workers recently implemented in an Italian depressed area. Our sample includes 859 workers, mostly women, who entered the program before April 2008 and were interviewed in 2009-10. We complement the existing administrative data with survey data that enables us to control for numerous individual and labour market characteristics for both treated and non-treated individuals. Using propensity-score matching methods, we find that the employment subsidy had a positive and significant effect (ATT) for participants on both the probability of finding a job and on their level of income. We also control for effect heterogeneity and find that the outcome of the policy was higher for women and, among them, we also find that the program was more effective on less educated and older female workers. Finally, we exploit unique information on previous contacts between workers and firms and on the use of informal channels for job search activity to explore the role of the program in promoting the transition from informal employment to a salaried economy.

Highlights

Women’s participation in the labor market is a classic topic in the labor economics literature, and gender issues are receiving increasing emphasis in the policy agenda
Using propensity-score matching, we find that a) the employment subsidy had a positive effect for participants on both the probability of finding a job and income, b) the outcome of the policy was more positive for women, and c) the program was more effective for older and less-educated female workers
As Bergemann and Van den Berg (2008) suggest in their recent survey of the literature on the effects of the active labor market programs (ALMPs) for women in Europe, an impact evaluation analysis is of primary importance if we want to deepen our knowledge of the forces driving gender differences in participation rates and income levels

Summary

Introduction

Women’s participation in the labor market is a classic topic in the labor economics literature (see, for example, Killingsworth and Heckman, 1986), and gender issues are receiving increasing emphasis in the policy agenda. Using the answers received in our survey to the question, “Before being hired, did you have the chance to collaborate with the firm that hired you?” we find that the sample of treated individuals has a significantly higher probability of having had previous contact with the firm Overall, these three pieces of evidence are consistent with the hypothesis that, at least in part, the ICS program has been effective in creating new employer-employee matches and in promoting the transition from informal employment to formal jobs. The interventions directed toward firms were not eventually implemented, and much more attention was paid to the labor supply side of the program through a mixture of policies including employment subsidies, counseling, tutoring and matching services.7 The latter service consisted of the possibility for unemployed workers to be directly matched to a vacancy in a firm that exactly required her/his qualification profile. From the initial sample of 877 individuals, only 795 were eventually hired by firms, with the difference attributable both to dropouts (27) and to firms that decided not to hire the worker following the probation period (55)

Data and descriptive statistics

Empirical analysis

VIII First wave

Findings

Conclusions