Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333672 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18233
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper studies the cost-effectiveness of targeted payroll taxes for stimulating labor demand. It uses rich administrative data to study the effects of an Italian reform that raised social security contributions for apprenticeship contracts but granted a substantial discount for firms with 9 employees or less. The discount does not increase demand for apprenticeship contracts. Instead, it subsidizes inframarginal hiring. This reform is not cost-effective. Point estimates imply that each million euros of foregone social security contributions supports the employment of 29 apprentices for one year and no permanent contracts (these estimates are not statistically different from zero).
Subjects: 
targeted payroll taxes
cost effectiveness
labor demand
JEL: 
J01
J08
H20
Document Type: 
Working Paper

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