Subsidising silence: how policy ideas entrench Italy’s use of employment subsidies

Italy’s active labour market policy (ALMP) regime is marked by a paradox: despite limited investment in training, job placement services, and direct job creation, the country allocates above-average resources to employment subsidies. While this subsidy-heavy approach is often explained by the structure of Italy’s low-skill, low-productivity economy, this article proposes a complementary explanation grounded in political economy. We argue that the dominance of employment subsidies reflects the influence of a powerful discourse promoted by business interests, which frames excessive labour costs as the core challenge of the Italian labour market. This narrative has steered policy decisions towards cost-reduction strategies, crowding out more transformative measures aimed at human capital development. To unpack these dynamics, we employ a mixed-method research design combining qualitative and quantitative text analysis. We map stakeholder narratives in national media using Natural Language Processing techniques (BERTopic) and analyse parliamentary debates to identify ideational drivers. Our findings reveal how business-driven narratives have driven policy preferences towards employment subsidies. The article makes three main contributions. First, it situates employment subsidies within Italian ALMP. Second, it demonstrates how ideas structure labour market interventions. Third, it introduces an innovative methodological approach that integrates computational text analysis with traditional qualitative methods.