In this paper, we assess the value of auditing the final high school grades on educational and labour market outcomes. We leverage a 2007 reform in Italy that introduced the presence of external examiners on the board. We compare treated and untreated cohorts in a two-way fixed effects model to show that the reform increased the earnings of high school graduates. We carry out two-way fixed effects and special regressor methods to prove that the reform raised the pupils’ years of schooling. We extend the combined fixed effects approach (Altonji and Zhong 2021) to attest that treated cohorts’ returns to graduation are about six percentage points as high as the untreated ones.

We study the impact of one more year of child’s education on household (non-durable) consumption. We exploit an exogenous shock generated by a university reform in Italy in the early 2000s. We find that families responded in a way that is consistent with education as a production good. The higher child’s education produced household positive, permanent income innovations. Hence, family non-durable consumption increased. Our findings suggest that education can be an insurance device against adverse permanent income shocks. The 2001 reform not only positively affected offspring’s years of schooling, but it also had a positive effect to boost household consumption.

Agata Maida and Daniela Sonedda⇑ Agata Maida is an associate professor of economics at the University of Milan. Daniela Sonedda is an associate professor of economics at the University of Piemonte Orientale and CRENoS research fellow Corresponding author: Daniela Sonedda, University of Piemonte Orientale, daniela.sonedda{at}uniupo.it

Employment protection legislation may affect the degree of substitutability among different types of labour contracts by changing the individuals sorting into jobs and firms screening in and out jobs. Using administrative data, we document this substitutability in the context of a labour market reform that changed the informative content of individual dismissals and provided incentives to training contracts in Italy in 2012. We present and simulate a model that shows that individual's and firm's behaviour have important implications for the impact of policies that lower firing costs. A more flexible employment protection legislation regime combined with incentives to training contracts reduces inefficiencies of job sorting and screening due to asymmetric information.

People with the same characteristics can experience very different permanent employment outcomes. This study exploits a unique setting in Italy to provide evidence on regional disparities in the commitment of the training provision and in the enforcement of the open-ended nature of vocational apprenticeships set out by a nation-wide reform. As a consequence, regional heterogeneity in permanent employment rates in both the short- and medium-run is estimated. Medium-run gains are possible even in absence of any impact at the baseline.

The technological progress and the globalisation process reshape the nature of jobs inducing a substantial drop in the incidence of permanent employment occupations. This paper estimates whether employers could be less reluctant to hire workers on a permanent basis in presence of a human capital investment which they partly finance. We find that the permanent employment rate of cohorts affected by law no. 92/2012 at the age threshold of 30 years increased by about 1% when compared to the permanent employment rate of similar untreated cohorts. This difference in discontinuity impact can be generated by the vocational apprenticeship labour contract only. After 36 months from the baseline, this positive effect persists and increases to about 5%. We interpret our results as evidence that a labour contract that invests in human capital serves as a stepping stone into permanent employment.

A fundamental observation of the 21st century is the substantial drop in permanent employment occupations. In this paper, I seek to understand the geographic variation in the capacity of a committed investment in human capital to serve as a stepping stone into permanent employment. Using Italian data, I verify whether regional disparities in general education and production systems play a key role in shaping how the vocational apprenticeship labour contract creates job matches that persist over time. I find that when the quality of the regional education system is good, the medium-run gains in terms of permanent employment can be moderate. However, a small number of productive firms in a region limits the quantity of job entries as apprentices.

Availability of free public education induces a transfer in kind among households with school age children. We provide evidence of the redistributive character of public education provision. We estimate structural quantile treatment effects of household income on the distribution of expected educational transfers in kind. Under the assumption that education quality is a normal good, better services (ancillary to the core education mission) supplied by private schools increase quality therein and reduce the incentives for wealthy households to enroll in public education. Because of these incentives, rich families benefit less from educational transfers in kind and the public education system is redistributive. Using household survey data from Italy, we find that an increase in net income reduces the value of the expected educational in kind transfers for compulsory education.

We use the variation of training policy over time and across Italian regions to identify the relationship between individual training and earnings. Using longitudinal data for the period 1999 to 2005, we find that the marginal effect of one additional week of formal training on monthly earnings is 4.4 percent. This effect declines rapidly over time and is equal to 0.86 percent 10 years after the investment. We also find that marginal returns are higher among small firms, which are more likely to be constrained by lack of economic resources in their training decisions. Since small firms train less than large firms, their higher returns from the training induced by training policies can simply reflect decreasing marginal returns to training.

The objective of this paper is to propose and apply a new method to evaluate the distributional impact of fiscal policies and potential marginal reforms. The econometric tool adopted is structural quantile treatment effects regression, which allows a complete picture of the effects of the fiscal policy of interest on households with different incomes, abilities, and needs. We apply this method to personal income taxation and non‐cash transfers in Italy for the year 2004. Our estimates suggest that, although heterogeneous, the redistributive effects of the potential fiscal reforms are almost zero.

We exploit the overlapping exogenous variation in b oth mandatory minimum early retirement age and government regional training subsidies in Italy dur ing the 1990s and early 2000s to estimate the causa l effect of training on the decision to retire and the causa l impact of the distance from minimum retirement age ‐ the horizon effect - on training. We find that both tra ining and pension policies have contributed to redu ce retirement and to increase training in our sample o f Italian males aged 45 to 56. The size of the esti mated effects is rather different, however. On the one ha nd, we find that an exogenous one - year increase i n mandated minimum early retirement age has reduced the probability of retirement and increased training by close to 9 and 12 percent respectively. On the othe r hand, we show that one additional real euro per h ead spent in training incentives has reduced retirement and increased training by 0.3 and 2 percent. Ceter is paribus, it would take an additional 6 euro per hea d per year (close to 240 million euro) for training policies to be as effective as retirement policies in encouragi ng training among older workers. We provide evidence that higher training substantially reduces the probabili ty of retirement in our sample, and that a longer w orking horizon significantly increases the individuals sto ck of training. We investigate reasons why training is so effective in reducing retirement. Our tentative est imates suggest that additional training reduces the risk of unemployment and increase earnings.

ABSTRACTAccording to the standard principal‐agent model, the optimal composition of pay should balance the provision of incentives with the individual demand for insurance. Do income taxes alter this balance? We show that the relative share of Performance‐related pay (PRP), on total pay is reduced by higher average and marginal income taxes. Empirical evidence based on the British Household Panel Survey is consistent with the theoretical predictions of the tax–augmented principal‐agent model. Our estimates suggest that a 10% reduction in the marginal income tax rate, holding the average tax rate constant, increases the share of PRP in total pay by 2.25–3.02%, depending on the empirical specification. Similarly, a 10% reduction in the average income tax rate, holding the marginal tax rate constant, increases the share of PRP in total pay by 5.10–5.27%.

This paper presents some empirical evidence for Italy from 1974 to 1995 on the relationship between the dynamics of unemployment and tax progressivity. To this purpose, the econometric tool is a Bayesian numerical approach based on a three-equation vector autoregression model where the unemployment effects are derived residually from the difference between employment and labor-force participation effects. By simultaneously estimating the labor market effects of changes in labor taxes, the current analysis points to the importance of the supply side of the labor market from a macroeconomic perspective and empirically supports the view that either the individual's or the aggregate labor participation decisions have to be taken explicitly into account when evaluating whether or not tax progressivity is a useful policy device against unemployment.

This article considers the relationship between labor income taxes and output. An illustrative model indicates that the sign of the output effect of labor taxation policies is ambiguous and depends not only on the technology parameters but also on the taxation level. The empirical evidence for fifteen Organisation for Economic Co-operation and Development (OECD) countries over the period 1974—97 shows that the effect is heterogeneous across countries both in the short run and in the long run when considering the average tax rate. We also find a common positive and significant long-run relationship for the marginal tax rate.

In a multisector economy with unionized labor markets, the interdependence of union wage claims-typical of industrial bargaining-affects the relationship between tax progressivity and wage pressure, which varies in a nonlinear fashion with the nature of the wage bargain, and can be hump-shaped. Our empirical analysis of 20 OECD countries for the period 1997-2004 shows that higher tax progressivity increases pre-tax wages (and unemployment) in countries characterized by industry level wage bargaining, and reduces them in countries with local or fully centralized bargaining.