IDEAS home Printed from https://ideas.repec.org/p/gwi/wpaper/2020-12.html
   My bibliography  Save this paper

A tale of two wage subsidies: The American and Australian fiscal responses to COVID-19

Author

Listed:
  • Steven Hamilton

    (George Washington University)

Abstract

Australia suppressed the virus with swift and strong public health measures including stringent border controls. As of July 2020, the virus continues to spread uncontrolled across the US, resulting in the most recorded cases and deaths of any country. Both countries instituted widespread lock-downs and similarly generous fiscal support, yet Australia has experienced a far milder recession, highlighting the critical role of public health measures in protecting the economy. The role of broad cash stimulus necessarily has been more limited than in an ordinary recession, justifying the use of wage subsidies that encourage businesses to retain workers. The Australian wage subsidy, delivered via the tax authority, was better targeted, more generous, more accessible, but slower to deliver liquidity than the American wage subsidy delivered via private banks. The experience highlights the critical need for significant investments in IRS infrastructure to better prepare for future crises.

Suggested Citation

  • Steven Hamilton, 2020. "A tale of two wage subsidies: The American and Australian fiscal responses to COVID-19," Working Papers 2020-12, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2020-12
    as

    Download full text from publisher

    File URL: http://www2.gwu.edu/~iiep/assets/docs/papers/2020WP/HamiltonIIEP2020-12.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Granja, João & Makridis, Christos & Yannelis, Constantine & Zwick, Eric, 2022. "Did the paycheck protection program hit the target?," Journal of Financial Economics, Elsevier, vol. 145(3), pages 725-761.
    2. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
    3. Humphries, John Eric & Neilson, Christopher A. & Ulyssea, Gabriel, 2020. "Information frictions and access to the Paycheck Protection Program," Journal of Public Economics, Elsevier, vol. 190(C).
    4. Ryan Decker & John Haltiwanger & Ron Jarmin & Javier Miranda, 2014. "The Role of Entrepreneurship in US Job Creation and Economic Dynamism," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 3-24, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Halima Jibril & Stephen Roper & Mark Hart, 2021. "COVID-19, business support and SME productivity in the UK," Working Papers 005, The Productivity Institute.
    2. James Bishop & Iris Day, 2020. "How Many Jobs Did JobKeeper Keep?," RBA Research Discussion Papers rdp2020-07, Reserve Bank of Australia.
    3. Michael Smart & Matthew Kronberg & Josip Lesica & Danny Leung & Huju Liu, 2023. "The Employment Effects of a Pandemic Wage Subsidy," CESifo Working Paper Series 10218, CESifo.
    4. Lee, Jun Seop & Chung, Byung Do, 2022. "Effects of government subsidy programs on job creation for sustainable supply chain management," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Webster Allan & Khorana Sangeeta & Pastore Francesco, 2022. "The effects of COVID-19 on employment, labor markets, and gender equality in Central America," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-43, January.
    2. Allen, Kyle D. & Whitledge, Matthew D., 2022. "Further evidence on the effectiveness of community banks in the Paycheck Protection Program," Finance Research Letters, Elsevier, vol. 47(PA).
    3. Guerrero-Amezaga, Maria Elena & Humphries, John Eric & Neilson, Christopher A. & Shimberg, Naomi & Ulyssea, Gabriel, 2022. "Small firms and the pandemic: Evidence from Latin America," Journal of Development Economics, Elsevier, vol. 155(C).
    4. Lei Li & Philip Strahan, 2020. "Who Supplies PPP Loans (And Does it Matter)? Banks, Relationships and the COVID Crisis," NBER Working Papers 28286, National Bureau of Economic Research, Inc.
    5. Auerbach, Alan & Gorodnichenko, Yuriy & McCrory, Peter B. & Murphy, Daniel, 2022. "Fiscal multipliers in the COVID19 recession," Journal of International Money and Finance, Elsevier, vol. 126(C).
    6. Santos, Cezar & Kozeniauskas, Nicholas & Moreira, Pedro, 2020. "Covid-19 and Firms: Productivity and Government Policies," CEPR Discussion Papers 15156, C.E.P.R. Discussion Papers.
    7. Robert W. Fairlie & Frank Fossen, 2021. "Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of COVID-19?," NBER Working Papers 28321, National Bureau of Economic Research, Inc.
    8. Sriya Anbil & Mark A. Carlson & Mary-Frances Styczynski, 2021. "The Effect of the PPPLF on PPP Lending by Commercial Banks," Finance and Economics Discussion Series 2021-030, Board of Governors of the Federal Reserve System (U.S.).
    9. Granja, João & Makridis, Christos & Yannelis, Constantine & Zwick, Eric, 2022. "Did the paycheck protection program hit the target?," Journal of Financial Economics, Elsevier, vol. 145(3), pages 725-761.
    10. Gustavo Joaquim & J. Christina Wang, 2022. "What Do 25 Million Records of Small Businesses Say about the Effects of the PPP?," Working Papers 22-23, Federal Reserve Bank of Boston.
    11. Giovanni Gallipoli & Christos A. Makridis, 2022. "Sectoral digital intensity and GDP growth after a large employment shock: A simple extrapolation exercise," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 446-479, February.
    12. Shinae L. Choi & Erin R. Harrell & Kimberly Watkins, 2022. "The Impact of the COVID-19 Pandemic on Business Ownership Across Racial/Ethnic Groups and Gender," Journal of Economics, Race, and Policy, Springer, vol. 5(4), pages 307-317, December.
    13. Berger, Allen N. & Demirgüç-Kunt, Asli, 2021. "Banking research in the time of COVID-19," Journal of Financial Stability, Elsevier, vol. 57(C).
    14. Georgij Alekseev & Safaa Amer & Manasa Gopal & Theresa Kuchler & J. W. Schneider & Johannes Stroebel & Nils Wernerfelt, 2023. "The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees," Management Science, INFORMS, vol. 69(1), pages 7-24, January.
    15. Raj Chetty & John N. Friedman & Michael Stepner & The Opportunity Insights Team, 2020. "The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data," NBER Working Papers 27431, National Bureau of Economic Research, Inc.
    16. Xavier Cirera & Marcio Cruz & Elwyn Davies & Arti Grover & Leonardo Iacovone & Jose Ernesto Lopez Cordova & Denis Medvedev & Franklin Okechukwu Maduko & Gaurav Nayyar & Santiago Reyes Ortega & Jesica , 2021. "Policies to Support Businesses through the COVID-19 Shock: A Firm Level Perspective [Economic Uncertainty before and during the COVID-19 Pandemic]," The World Bank Research Observer, World Bank, vol. 36(1), pages 41-66.
    17. Michael D. Noel, 2022. "Competitive survival in a devastated industry: Evidence from hotels during COVID‐19," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 3-24, February.
    18. Scott R. Baker & Robert A Farrokhnia & Steffen Meyer & Michaela Pagel & Constantine Yannelis, 2023. "Income, Liquidity, and the Consumption Response to the 2020 Economic Stimulus Payments," Review of Finance, European Finance Association, vol. 27(6), pages 2271-2304.
    19. Shui, Bingbing, 2023. "Major risk shocks, financial relief policies and loan maturity for MSMEs: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PA).
    20. Sabrina T. Howell & Theresa Kuchler & David Snitkof & Johannes Stroebel & Jun Wong, 2021. "Lender Automation and Racial Disparities in Credit Access," NBER Working Papers 29364, National Bureau of Economic Research, Inc.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gwi:wpaper:2020-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kyle Renner (email available below). General contact details of provider: https://edirc.repec.org/data/iigwuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.