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How Many Jobs Did JobKeeper Keep?

Author

Listed:
  • James Bishop

    (Reserve Bank of Australia)

  • Iris Day

    (Reserve Bank of Australia)

Abstract

The JobKeeper Payment is a wage subsidy to help firms affected by COVID-19 retain their staff. We examine the extent to which JobKeeper cushioned employment losses in the first four months of the program. To do this, we use worker-level data from the Labour Force Survey and an identification strategy that exploits a threshold in eligibility to infer causality. We find that one in five employees who received JobKeeper (and, thus, remained employed) would not have remained employed during this period had it not been for the JobKeeper Payment. Given that 3½ million individuals were receiving the payment over the period from April to July 2020, this implies that JobKeeper reduced total employment losses by at least 700,000 over the same period. We discuss the potential sources of bias that might affect our results, some of which stem from the fact that our conclusions are based on a sample of casual employees who may have responded differently to JobKeeper than other workers. Our paper does not consider the longer-run effects of JobKeeper on employment or the indirect channels through which JobKeeper may have affected employment.

Suggested Citation

  • James Bishop & Iris Day, 2020. "How Many Jobs Did JobKeeper Keep?," RBA Research Discussion Papers rdp2020-07, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2020-07
    DOI: 10.47688/rdp2020-07
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    References listed on IDEAS

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    1. Steven Hamilton, 2020. "A Tale of Two Wage Subsidies: The American and Australian Fiscal Responses to COVID-19," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 829-846, September.
    2. Balleer, Almut & Gehrke, Britta & Lechthaler, Wolfgang & Merkl, Christian, 2016. "Does short-time work save jobs? A business cycle analysis," European Economic Review, Elsevier, vol. 84(C), pages 99-122.
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    6. 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.
    7. Glenn Hubbard & Michael R. Strain, 2020. "Has the Paycheck Protection Program Succeeded?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(3 (Fall)), pages 335-390.
    8. Michael C. Burda & Jennifer Hunt, 2011. "What Explains the German Labor Market Miracle in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 273-335.
    9. Alexander W. Bartik & Marianne Bertrand & Feng Lin & Jesse Rothstein & Matthew Unrath, 2020. "Measuring the Labor Market at the Onset of the COVID-19 Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 239-268;316.
    10. James Bishop & Linus Gustafsson & Michael Plumb, 2016. "Jobs or Hours? Cyclical Labour Market Adjustment in Australia," RBA Research Discussion Papers rdp2016-06, Reserve Bank of Australia.
    11. Rebecca Cassells & Alan Duncan, 2020. "JobKeeper: The efficacy of Australia’s first short-time wage subsidy," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 23(2), pages 99-128.
    12. Katharine G. Abraham & Susan N. Houseman, 2014. "Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience During the Recent Recession," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 543-567, October.
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    Citations

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    Cited by:

    1. Graham, James & Ozbilgin, Murat, 2021. "Age, industry, and unemployment risk during a pandemic lockdown," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    2. Borland, Jeff & Hunt, Jennifer, 2021. "Did the Australian Jobkeeper Program Save Jobs by Subsidizing Temporary Layoffs?," IZA Discussion Papers 14859, Institute of Labor Economics (IZA).
    3. Guay Lim & Viet Nguyen & Tim Robinson & Sarantis Tsiaplias & Jiao Wang, 2021. "The Australian Economy in 2020–21: The COVID‐19 Pandemic and Prospects for Economic Recovery," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 5-18, March.
    4. Jeff Borland & Jennifer Hunt, 2023. "JobKeeper: An Initial Assessment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(1), pages 109-123, March.
    5. David Evans & Claire Mason & Haohui Chen & Andrew Reeson, 2023. "An algorithm for predicting job vacancies using online job postings in Australia," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.

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    More about this item

    Keywords

    wage subsidy; employment; COVID-19;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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