What is the impact of a monetary subsidy to unemployed workers?

We provide an econometric estimate of the income and employment outcomes for unemployed workers who have benefited from an unconditional money transfer program. The program, labeled AOS-Accoglienza Orientamento e Sostegno, is financed by Ufficio Pio of the Compagnia di San Paolo, one of the largest banking foundations in Europe.

During the period from 2010 to 2016, approximately 11,000 families benefited from the program, an average transfer of 1,500EUR aimed at families with children and an annual income (ISEE) of less than 7,000EUR. The cash transfer has a limited duration of one year.

We find a significant and positive impact of the cash transfers on the labor income perceived by the participating families, suggesting that easing financial distress helps in securing employment. This positive impact is observed both during the program participation and in the two years following. Importantly, the positive effect on earned income tends to intensify over time, reaching its highest value in 2019, three years after the cash transfer is implemented.

We also find that throughout the years the effect of transfers on labor incomeis considerablyhigher when the transfer is made conditional on the attendance of job training, rather thanbeing an unconditional transfer.

The project is based on a randomized experiment and uses detailed individual work histories from the Italian Social Security Authority (INPS).