Lucia Rizzica (Bank of Italy)
Marta De Philippis and Edoardo Frattola
Hiring freezes are widely used to curb public expenditure, yet their effects on organizational performance remain poorly understood. We study a large-scale hiring restriction policy in Italian public universities that generated exogenous variation in both faculty size and age composition. Using administrative data on students and faculty, we show that hiring restrictions significantly worsen student outcomes, primarily by increasing time to graduation. Leveraging policy variation and pre-existing demographic structures, we disentangle the effects of faculty size and workforce ageing in an instrumental variables framework. We show that both margins independently and significantly contribute to the deterioration of performance.