Publications
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).
Abstract
In this paper, we study the selection patterns of individuals who manage to have their lay-off delayed around an age at lay-off threshold entitling them to four additional months of unemployment insurance, that is, manipulators. Using administrative data from Italy and bunching techniques, we document substantial manipulation around the cut-off and show that manipulators are selected on their long-term non-employment risk, but not on their moral hazard cost. Finally, we develop a sufficient statistics framework to assess how these findings affect optimal unemployment insurance duration in the presence of manipulation.
Abstract
We take an off-the-shelf model of the day-ahead electricity market, in the spirit of (Reguant, 2019) and use it to study how different emergency policy interventions proposed in response to the 2021–2022 European energy crisis would feed into short run wholesale electricity price and quantity dynamics. Calibrating the model to Italian data, our analysis predicts that an EU-wide cap on natural gas prices significantly reduces electricity prices, while consumed quantities increase only marginally. A mandated reduction in electricity demand during peak hours leads to modest price declines, while a national cap on gas prices for electricity generation triggers a sharper increase in consumption due to cross-border trade incentives. These findings suggest that emergency interventions can mitigate the short-term impact of price shocks, though they may also introduce inefficiencies in terms of energy consumption and market distortions.
Abstract
We perform an analysis of the green investments contained in the Italian National Recovery and Resilience Plan (NRRP) by comparing environmental benefits to the investment cost. We compute the future discounted environmental benefits in terms of expected greenhouse gases emission reductions using various estimates of the Social Cost of Carbon. Our results suggest that several projects would not have a positive net present value, unless the discount rate is relatively low and benefits accruing to developing countries receive a higher weight. The fact that investments under the NRRP are financed via long-term debt helps in bridging the gap between costs and environmental benefits. Investments in renewable energy are an exception, as their environmental benefits outweigh the cost within a short time-frame.
Abstract
This paper documents the effects of increased import competition from China on the Italian labor market. In line with recent studies, we take two complementary approaches and study both the effects on local labor markets and on manufacturing workers. Our analysis shows that the Italian local labor markets which were more exposed to Chinese trade by means of their industry composition ended up suffering larger manufacturing and overall employment losses. Nevertheless, back-of-the-envelope calculations suggest that the aggregate effect on total manufacturing employment is modest. At the individual level, contrary to what has been documented for many developed countries, workers initially employed in more exposed manufacturing industries did not suffer long-term losses in terms of lower earnings or more discontinuous careers. While they were indeed less likely than other similar workers to continue working in manufacturing, they were also able to carry out successful transitions toward the non-tradable sector, in other areas with better job opportunities.
Working papers
Abstract
We quantify how large, unexpected energy-price hikes affect Italian industrial firms during the 2021-22 energy crisis. For identification we exploit the staggered expiration of fixed-price energy contracts. Contract expiration raises firms' average per-unit cost of electricity and gas by 47 percent and 29 percent, respectively. Electricity demand does not respond, while gas consumption falls only in the second half of 2022, with substantial heterogeneity across firms. Gas-intensive firms, which account for 80% of industrial gas consumption, are almost perfectly inelastic, while other firms' price elasticity is -1.3. The estimated heterogeneity has important implications for policy design. A simple incidence framework shows that subsidies targeted to gas-intensive firms, combined with pay-for-reduction schemes for other firms, can focus resources to the most exposed consumers while achieving energy savings.
Abstract
Financial crises often lead to drastic reductions in firms' access to credit, impairing their ability to finance operations. This paper shows that firms partly offset the effects of these shocks by optimally adjusting their wage bills. We augment a standard model of firm dynamics with financial frictions by allowing wages to be set at the firm level within long-term employment relationships. In this environment, wages solve a dynamic contracting problem that trades off insuring risk-averse workers against preserving resources for investment. We validate the model predictions on wage dynamics using matched employer-employee data from Italy. We find that more constrained firms adjust wages more in response to idiosyncratic and aggregate shocks. In addition, firms that suffer the most during recessions backload wages by paying workers relatively more in the future than today. When matching these statistics with our general equilibrium model, we find that these wage adjustments reduce the sensitivity of output to financial shocks by 20%. We conclude by studying the effects of investment subsidies: firms backload wages more in response to the policy, making the policy more effective.
Selected work in progress
Chapter in books
Dormant projects
Abstract
Despite the increased frequency of extreme weather events and large premium subsidies, the use of climate-related crop insurance contracts in European countries remains low. We investigate the economic factors behind these low coverage rates by linking Italian administrative data on insurance purchases and damage claims to high-frequency georeferenced data on weather events. We focus on two potential explanations: inefficient pricing of insurance contracts due to adverse selection and choice frictions that create a wedge between the value of insurance and actual demand. To identify adverse selection, we leverage a 2014 reform that lowered the cap for premium subsidies in EU countries. This policy caused a reduction in demand and an increase in average costs for insurers, indicating adverse selection. Regarding frictions, we document through a staggered difference-in-differences design that firms are more likely to buy insurance when faced with "salient" extreme events, suggesting that farmers are imperfectly informed about the value they assign to insurance. We conclude by discussing how current price subsidies may be less effective than insurance mandates in light of these uncovered market failures.
Abstract
What are the returns to apprenticeships? This paper tries to answer this question by leveraging novel administrative data from Italy on individual careers. We adopt a difference-in-difference methodology to compare the labor market outcomes of individuals starting an apprenticeship with those of similar individuals starting temporary contracts that, at least formally, do not provide training. We find apprenticeships to be a "double-edged sword". While they do guarantee a stronger labor market attachment during the first three years after the start of the contract, they produce ambiguous effects afterwards. Apprenticeships increase the probability of conversion to open-ended contracts, especially at the initial firm, but decrease the probability of obtaining further temporary jobs, especially at other firms. Quantitatively, this second effect prevails, generating a negative effect of the probability of having any job. These findings are consistent with a model where retention rates after the end of an apprenticeship convey stronger signals about workers' ability compared to retention after the end of a temporary contract.
Abstract
This paper examines job reallocation in Italy from the 1980s to 2022, comparing the COVID-19 pandemic with previous recessions. Using administrative data for the universe of Italian firms, in contrast with recent evidence from the U.S. and with other recession episodes in Italy, we document that job reallocation decreased during the pandemic. While job reallocation between industries increased slightly, within-industry movements dropped sharply and substantially, driving aggregate trends. This decrease can be attributed to short-time work programs, more widespread during COVID-19 than in past recessions and more prevalent in Europe than in the U.S.