Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273907 
Year of Publication: 
2022
Series/Report no.: 
WIDER Working Paper No. 2022/114
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Wage subsidies have served as a primary labour market policy used around the world to mitigate job losses in response to the COVID-19 pandemic. In South Africa, where unemployment is among the highest globally, the Temporary Employer-Employee Relief Scheme supported millions of workers in a far-reaching and progressive manner. We make use of unique labour force panel data to estimate the causal effect of the policy on short-term job retention among formal private sector workers, who represent the majority of workers in the country, by exploiting a temporary institutional eligibility detail and estimating a difference-in-differences model. We find that the policy increased the probability of remaining employed by 16 percentage points in the short-term. This finding holds when subjected to several robustness tests. We further estimate heterogeneous and progressive effects across the wage distribution with larger effects observed for lower-wage workers, against a backdrop of regressively distributed job loss in the country. Our analysis provides evidence on the role of wage subsidies in the mitigation of job loss during crises in developing countries.
Subjects: 
COVID-19
South Africa
labour market
wage subsidy
job loss
Temporary Employer-Employee Relief Scheme
JEL: 
J08
J38
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-248-5
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.