Download or read book The Effect of Wage Subsidies on Job Retention written by Timothy Köhler and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.