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 provides evidence on the labor market effects of the progress of the EU cohesion policy funding projects on education and training in the Italian regions during the Great Recession. We find that where the EU funds were effectively transferred to the beneficiaries, the negative consequences of the recent crisis on employment were smoothed. No significant effects are registered when looking at the intensive margin, in line with theoretical predictions. We also document that the buffering action of human capital policies for regional labor markets is high in the regions with low educational attainment levels, by confirming the role of human capital policies for catching-up processes. The results control for cross-sectional dependence and endogeneity issues.