Temporary wage subsidies and post-COVID re-employment in Morocco: a regression discontinuity approach

ABSTRACT

This paper aims to evaluate the causal effect of a temporary wage subsidy scheme implemented in Morocco during the COVID-19 crisis. It exploits a discontinuity in the eligibility condition of this subsidy, which is the number of days reported before job loss, to identify its causal effect on beneficiaries’ unemployment duration and re-employment probability by using the regression discontinuity method based on administrative data from the National Social Security Fund (CNSS). Our findings indicate that this subsidy has reduced the duration of unemployment and improved the probability of re-employment of beneficiary employees. However, they also show that these positive effects seem to have been less pronounced among those most excluded from the labour market, namely women and young people.

KEYWORDS:

• COVID-19
• impact evaluation
• Morocco
• regression discontinuity design
• wage subsidies

JEL CLASSIFICATION:

• E24
• E62
• H2

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. It assigns zero weight to all observations with a score outside the interval and positive weight to all observations within this interval. The weight is maximised at the cut-off and decreases symmetrically and linearly as the score value moves away from the threshold.

2. Although it may seem at first glance that a linear polynomial is not flexible enough, an appropriately chosen bandwidth will adjust to the polynomial order so that the linear approximation of the unknown regression functions is reliable (Cattaneo, Idrobo, and Titiunik 2019).

3. The average period of the unemployment benefit in our sample 178.2 days, knowing that the maximum benefit period is 180 days.