Higher short-time work benefits reduce job-to-job mobility
A 10-percentage-point increase in short-time work replacement rates raises employer retention by nearly 3 percent in Italy. A Bank of Italy working paper published on October 20, 2026, estimates an 18.7 percent reduction in job-to-job moves.
Benefit threshold separates worker outcomes
Gaetano Basso, Emanuele Ciani, Francesco Manaresi and Lorenzo Pesaresi exploit a discontinuity in Italy's short-time work benefit schedule using linked employer–employee data for 2008–2019.
At a monthly wage of €2,102.24 in 2016, the benefit cap rises from €971.71 to €1,167.91. The statutory replacement-rate increase is 9.3 percentage points, approximately 10 points.
After 12 months, retention rises 2.2 percentage points, or 2.7 percent, while moves to another employer fall 1.7 points, or 18.7 percent.
Robust p-values are 0.089 and 0.116, respectively; the mobility estimate therefore falls short of conventional significance levels.
The authors find no statistically detectable effect on leaving salaried employment.
Retention carries a reallocation cost
Reduced mobility concentrates among workers with below-median wage fixed effects, a proxy for earning potential, and is stronger among younger workers and in slack labor markets.
The estimated retention elasticity is 0.15; the implied benefit-duration elasticity is 0.07. Under log utility, the model values marginal redistribution at 1.33 against a fiscal cost of 1.15, placing benefits locally below their optimum.
An illustrative combination with firm responses raises the fiscal-cost multiplier to 1.53.
Local evidence limits policy conclusions
The estimates identify responses near one wage threshold, not an economy-wide effect.
The authors hold job creation and contact rates fixed, leaving aggregate allocation effects unresolved.
Their combined fiscal multiplier is illustrative because the worker and firm estimates use different policy experiments.