Prolonged production shutdowns due to COVID-19 are severing ties between employers and workers. In Myanmar’s garments sector, as of early April, tens of thousands of workers have already been laid off, with many more facing risks of job loss. Further, some firms appear to be acting opportunistically to fire union members. These types of manufacturing jobs, which pay decent, regular wages, are scarce in developing countries (World Bank, 2012) and often provide women with their first formal-sector job opportunities (Heath and Mubarak, 2015). It is critical to protect these valuable work relationships, especially accumulated learning and job/firm-specific skills. Thus, the study proposes to top-up a short-term income support program for terminated workers with experimentally-allocated wage vouchers to incentivize retention in the medium-term.
This research will contribute causal evidence on whether wage subsidies can promote economic recovery during an economic crisis and on person-firm match effects. While the existing literature on wage subsidies for disadvantaged groups provides mixed evidence (see Katz 1996 and Betcherman et al. 2004 for summaries), there is less evidence on whether wage subsidies during an economic crisis can promote recovery (Bruhn,2020). The project hypothesizes that a substantial medium-run economic cost of COVID-19 may be the destruction of valuable worker-firm matches. While organizational and labor economics has long been interested in the value of matching the right workers to the right firm (Lazear and Oyer, 2007; Bandiera et al. 2015, 2019), empirical progress has been limited due to the scarce availability of granular productivity and task-specific skills data.
The research team will use four rounds of mobile phone-based surveys to track participants for 6-9 months. They will recruit participants, conduct a baseline survey, and inform them of their voucher eligibility in the first phone call. They are also exploring collecting data from and conducing a firm-side intervention through our ongoing collaboration with the Myanmar Garment Manufacturers Association to conduct a COVID-19 panel survey of its members.
The project will contribute facts about gender, jobs, and poverty by identifying whether men and women are differentially retained after COVID-19, and if so, whether wage vouchers can support women’s retention in the labor force. It will also contribute evidence on the future of work by identifying how COVID-19 is affecting employers’ demand for skilled and unskilled labor. Our evidence will provide early insight into the concern that the need to maintain physical-distancing policies until a vaccine is developed may speed automation in manufacturing sectors.