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We analyse the impact of the end of the hiring incentives introduced in Italy through the Budget Law for 2015 on job and employment security. Despite the large use of incentives across OECD countries, the literature on this is surprisingly scant. The subsidies aimed to foster hirings under open-ended contracts through very generous social security rebates. The application of a non-linear difference-in-differences specification to high-frequency population-wide employer-employee administrative data source from a large Italian region within a duration setting, suggests that separations spike at the subsidy's expiration, implying that direct employment effects were at best temporary. Nonetheless, incentives may have benefitted workers beyond their capacity to stay in the subsidized job (what is labelled job security), i.e. through human capital and experience effects, incentives may have raised the workers' probability to remain employed across different jobs. Indeed, by applying our model to employment rather than job spells, we find that the probability to move to non-employment when the subsidies expire does not significantly change, suggesting that benefitted workers do not enjoy better longer-term employment perspectives thanks to the incentive programme. Heterogeneity analysis shows individuals with tertiary education suffer less from the reduced job security, while no distributive effect emerges in terms of employment security.
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