Damiani, M., Pompei, F., & Ricci, A. (2022). Tax breaks for incentive pay, productivity and wages: Evidence from a reform in Italy. British Journal of Industrial Relations.

This paper analyses the impact of a tax break on incentive pay(introduced in Law n. 208/2015) on labour productivity and average wages inItalian firms. We use a unique source of firm‐level information drawn from alarge representative survey of Italian firms merged with the ORBIS archive.By applying difference‐in‐differences methods, we obtain the followingresults. First, the tax break has a positive effect on both labourproductivity and average wages, although the positive effect on average wagesis not confirmed by robustness tests. Second, productivity impacts are mainlydriven by family firms in northern regions, where firms benefit from the moredynamic business environment in which they operate. These results take intoaccount unobserved heterogeneity and endogeneity issues.