Evaluating the Impact of Intermediation Agencies on Labor Market Insertion in Morocco

Labour market intermediaries (LMIs) play an important role in facilitating the entry of workers into the labour market and improving the matching quality between employees and employers. However what is the impact of these LMIs?
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Evaluating the Impact of Intermediation Agencies on Labor Market Insertion in Morocco
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Empirical Tests on Intermediation Programmes and Labour Market Accessibility in Morocco: A Comparative Study - The Indian Journal of Labour Economics

Year after year, labour market intermediaries (LMIs) play an important role in facilitating the entry of workers into the labour market and improving the matching quality between employees and employers as reported by Autor (Studies of Labor Market Intermediation 2009). In Morocco, there are different types of intermediation agencies that offer various services, such as direct placement, training, and subsidised employment. The goal of this study is to evaluate the impact of two types of these LMIs, namely placement agencies and subsidised employment agencies (specifically, the “IDMAJ” programme), on labour market insertion in Morocco. To achieve this objective, we employed the double-difference method using data from the High Commission of Planning (HCP) “employment” surveys conducted in 2012 and 2015, as well as the matching method using data from the Ministry of Employment and Vocational Training’s 2010 survey. The results of our analysis indicate that placement intermediaries contribute significantly in improving employment rates amongst beneficiaries, while the IDMAJ programme has a positive but statistically weak impact on reducing unemployment. Our study is one among several that evaluate the effectiveness of active labour market policies (ALMPs) in Morocco, including Chatri et al. (J Labour Mark Res 55:17, 2021), and Saadi, Laamire, and EL Abbassi (Les Cahiers du Plan, (53), 55–67, 2021).

Morocco’s labor market is characterized by various challenges, including high unemployment rates and a mismatch between job seekers’ skills and market needs. To address these challenges, the Moroccan government has implemented several active labor market policies (ALMPs) aimed at improving employment outcomes. Among these policies, intermediation agencies play a crucial role in facilitating labor market insertion. These agencies provide a range of services, including direct placement, training, and subsidized employment, all of which are designed to support job seekers in their transition to the labor market. This study focuses on assessing the impact of two specific types of intermediation agencies: placement agencies and subsidized employment agencies, with a particular emphasis on the "IDMAJ" program.

  • The Role of Intermediation Agencies in Morocco

Intermediation agencies in Morocco serve as intermediaries between employers and job seekers, assisting both parties in finding suitable matches. These agencies often play a critical role in helping individuals, particularly youth and graduates, overcome barriers to employment. The services provided by these agencies vary, but the most common ones include:

1. Direct Placement Services

Placement agencies help job seekers find employment by matching them with employers looking for specific skills or qualifications. These agencies work closely with employers to understand their needs and help candidates prepare for interviews and job placement.

2. Training Programs

Many intermediation agencies offer training programs aimed at enhancing the employability of job seekers. These programs may focus on specific skills, such as technical training, soft skills, or job search strategies, to ensure that individuals are well-equipped to enter the workforce.

3. Employment Programs

The government runs several programs to subsidize employment, particularly for individuals who may be considered high-risk in the labor market, such as youth, women, and long-term unemployed individuals. One such program is IDMAJ, which is designed to provide subsidies to employers who hire individuals from disadvantaged backgrounds.

The goal of this study is to evaluate the impact of two specific types of labor market intermediaries: **placement agencies** and **subsidized employment agencies** (with a focus on the **IDMAJ program**). The key research question is to what extent these programs help improve employment outcomes for beneficiaries and reduce unemployment in Morocco.

Methodology

To analyze the effectiveness of these intermediation programs, we utilized two primary research methods: the **double-difference method** and the **matching method.

Double-Difference Method

The double-difference (also known as difference-in-differences) method is a statistical technique used to estimate the treatment effect of a policy intervention. It compares the changes in employment outcomes between a treatment group (those who participated in the program) and a control group (those who did not) before and after the intervention. This method allows for isolating the effect of the program from other external factors that may have influenced the labor market.

For this study, we used data from the High Commission of Planning (HCP)’s “employment” surveys conducted in 2012 and  2015. These surveys provide a comprehensive overview of labor market conditions in Morocco, including employment rates, unemployment rates, and demographic characteristics of the workforce. By comparing the employment outcomes of individuals who participated in placement agencies and the IDMAJ program with those who did not, we were able to assess the impact of these interventions on labor market insertion.

 Matching Method

The matching method is another statistical technique used to estimate the causal impact of a treatment or intervention. It works by matching individuals who participated in the program with similar individuals who did not participate, based on characteristics such as age, education level, and employment history. This helps control for potential selection bias, ensuring that the treatment and control groups are comparable.

For the matching analysis, we used data from the Ministry of Employment and Vocational Training’s 2010 survey, which provided detailed information on labor market participants and their characteristics. By matching individuals who participated in the IDMAJ program with those who did not, we were able to assess the effectiveness of subsidized employment in improving labor market outcomes.

Key Findings

The results of our analysis reveal important insights into the effectiveness of labor market intermediation programs in Morocco, particularly placement agencies and the IDMAJ program.

Placement Agencies

Our findings indicate that placement agencies have a significant and positive impact on employment outcomes. Beneficiaries of placement agency services were more likely to find employment compared to those who did not participate in these programs. This outcome can be attributed to the agencies' role in matching job seekers with employers and preparing them for the labor market. The placement agencies help bridge the gap between job seekers and employers, reducing the time spent searching for a job and improving job match quality. 

The double-difference analysis showed a marked increase in the employment rates among individuals who participated in placement programs. This suggests that the services provided by placement agencies are effective in reducing unemployment, particularly for individuals who face greater challenges in securing employment due to lack of experience or qualifications. Placement agencies also contribute to improving the overall efficiency of the labor market by reducing frictions and enhancing the matching process.

IDMAJ Program

The IDMAJ program, which focuses on subsidizing employment for disadvantaged groups, also showed positive results, but with weaker statistical significance. While there was a noticeable reduction in unemployment rates among those who participated in the IDMAJ program, the impact was less pronounced compared to the placement agencies. The matching analysis suggested that while subsidized employment programs like IDMAJ may help reduce short-term unemployment, the long-term effects on sustained employment are less clear. One potential explanation for this weaker effect is that the program may not provide the same level of support in terms of job matching and skill development as placement agencies. Moreover, subsidized jobs may sometimes be temporary or of lower quality, limiting their potential to provide long-term, stable employment.

Nevertheless, the IDMAJ program still represents an important policy tool for tackling unemployment, especially for young people and those facing significant barriers to entering the workforce.

Contextualizing the Results: Previous Studies

Our study contributes to the growing body of literature evaluating the effectiveness of ALMPs in Morocco. Previous research, such as the work by **Chatri et al. (2021)** and **Saadi, Laamire, and EL Abbassi (2021)**, has also explored the role of active labor market policies in improving employment outcomes. These studies, similar to our own, highlight the importance of intermediation programs in addressing labor market challenges. Chatri et al. (2021) found that employment services, including training and job placement programs, had a positive effect on employment rates, while Saadi et al. (2021) examined the role of subsidies in reducing unemployment among vulnerable groups. Our findings align with these studies, confirming the value of active labor market interventions in improving labor market outcomes.

Conclusion

In conclusion, the evaluation of intermediation agencies in Morocco reveals that both placement agencies and subsidized employment programs like IDMAJ contribute to improving labor market insertion, albeit with varying levels of effectiveness. Placement agencies are particularly successful in improving employment rates by facilitating job matching and preparing job seekers for the labor market. On the other hand, while the IDMAJ program shows positive effects in reducing unemployment, its impact appears to be weaker and more limited in scope. These findings suggest that while subsidized employment programs are valuable, they may need to be complemented by other forms of support, such as job placement services and skill development programs, to have a more lasting and significant impact on employment outcomes. As Morocco continues to tackle its labor market challenges, these intermediation programs remain essential components of the broader strategy to reduce unemployment and foster economic growth.

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