Female-Targeted Hiring Subsidies, Firm Learning, and Women’s Employment

Author: Mimosa Distefano (Centre for Economic Performance, London School of Economics and Political Science)Lorenzo Incoronato (University of Naples Federico II and RFBerlin)Anna Raute (Queen Mary University of London)
Posted: 6 August 2026

Abstract

Women often struggle to re-enter employment after career breaks, possibly because employers are uncertain about their productivity. We study whether hiring subsidies help firms overcome this uncertainty and hire from this group. Exploiting an Italian policy that temporarily cut payroll taxes for women hired from non-employment, we find that firms persistently hire more women with career breaks, including mothers, following subsidy adoption. Consistent with employer learning about target-group productivity, firms with better initial matches later hire more from this group. Subsidized workers also show stronger labor-market attachment. These findings suggest demand-side interventions can complement supply-side policies in addressing gender gaps.
JEL codes: J16, J23, H25, D83
Keywords: gender employment gap; mothers; hiring subsidies; employer learning; firm hiring behavior