The paper analyses theoretically and empirically the effects on young people’s labour market outcomes of two specific labour market institutions and their interaction: employment protection legislation and active labour market policy. More specifically, the paper examines recent policy reforms in Italy focusing on the impact of the 2012 Fornero reforms of employment protection legislation as well as the initial impact of the EU-wide Youth Guarantee scheme introduced in Italy in March 2014. The paper also examines how these two policy reforms interacted.