The effect of subsidies for transformations to permanent contracts. First evidence from an Italian policy

In October 2012 the Italian government introduced incentives to firms for the transformation of specific categories of contracts. The incentives were planned to last from October 17, 2012 to March 31, 2013, but after less than a month, the allocated funds were finished. After describing stabilizations and transformations in Italy and the Veneto region during recent years through the analysis of administrative data on active labor market policies, the aim of this paper is to provide some preliminary results for the effect of the policy in the Veneto region. Our results show that these incentives have increased the stabilization of allotted workers and they are robust with respect to different identification strategies. However, many financed stabilizations would have taken place even in the absence of incentives.