A note on the effects of human capital policies in Italy during the Great Recession

Human capital policies can make labor supply more resilient to adverse shocks. This note investigates the role of regional human capital policies funded by the EU cohesion policy on the Italian regional labor markets during the Great Recession. By using different panel models, we find that the EU funds financing education and training contributed to smooth the negative employment consequences of the recent crisis. We detect limited effects in terms of hours allocated to job-insurance mechanism. We also document that the role of human capital policies is high in the regions with low educational attainment levels, in line with theoretical predictions on catching-up processes. Our findings are fairly robust to alternative specifications and endogeneity issues.