Work Integration Social Cooperatives in Italy: Public finance sustainability of active labour policies for disadvantaged individuals

Unemployment and limited access to decent job opportunities disproportionately affect individuals facing various forms of vulnerability. In Italy, policies designed to promote the participation of this disadvantaged labour force grant Work Integration Social Cooperatives (WISC) tax benefits and contribution revenues. In return, WISCs employing disadvantaged individuals generate public finance savings by lowering publicly funded health care and social assistance expenditures, while also creating value added through increased VAT revenues. This paper investigates whether the net balance for public finances of such labour policies is negative or positive. We employ a monetary cost-benefit analysis of 6,892 job placements facilitated by social cooperatives in Lombardy, Emilia-Romagna, and Veneto between 2014 and 2023. Specifically, we use VALORIS, an evaluation approach that assesses the financial sustainability of every single job placement of disadvantaged workers, and apply it to 92 WISCs followed between 2014 and 2023. Our results indicate that the Italian active labour policy of work integration of disadvantaged workers in social cooperatives is self-financing. Moreover, we find heterogeneity in the costs and benefits associated with different types of disadvantages. Finally, we highlight the relevance of the job placement of workers who are signalled as vulnerable by social services, but who do not receive incentives for their hiring, in producing positive effects on the public budget.