Measuring the Impact of the Italian CFL Programme on the Job Opportunities for the Young

The CFL programme has been introduced in 1985 to improve the youths occupational chances. It provides the employers some incentive to recruit young workers by reducing both the labour and the firing costs relative to those they would bear by recruiting older workers. Following the literature, the expected impact of the programme is to increase the eligibles chance to work during the eligibility period as well as to improve their chance to work after the eligibility period thanks to the longer work experience obtained during the eligibility period. A substitution effect might emerge since as subjects get out of eligibility employers might find convenient to replace them by younger still eligible workers. To measure the impact of the programme we exploit the variation over time and across geographical areas of the incentive to hire eligible workers induced by several reforms of the programme as well as its interaction with other incentive schemes._x000d_ _x000d_ Keywords: targeted wage subsidy, firing costs, substitution effect