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JobKeeper: The efficacy of Australia’s first short-time wage subsidy

Author

Listed:
  • Rebecca Cassells

    (Bankwest Curtin Economics Centre)

  • Alan Duncan

    (Bankwest Curtin Economics Centre)

Abstract

The Australian JobKeeper wage subsidy is an unprecedented public policy response to a once in a century health and economic crisis induced by the COVID-19 pandemic. The focus of this paper is on the efficacy of the Australian JobKeeper program design, including how well it meets its overall objective of retaining employer-employee matches; how well it is targeted relative to the needs of both businesses and workers; and the adequacy of JobKeeper as a wage replacement scheme. We consider both the original JobKeeper design, JobKeeper 2.0 and a series of alternative wage subsidy designs that we believe would more effectively target both employers and workers, incentivise a reallocation of labour and support a faster economic recovery.

Suggested Citation

  • 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.
    • Handle: RePEc:ozl:journl:v:23:y:2020:i:2:p:99-128
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    References listed on IDEAS

    as
    1. Tito Boeri & Herbert Bruecker, 2011. "Short-time work benefits revisited: some lessons from the Great Recession [‘Reversed roles? Wage and employment effects of the current crisis’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(68), pages 697-765.
    2. Alessio Brown & Johannes Koettl, 2015. "Active labor market programs - employment gain or fiscal drain?," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-36, December.
    3. Cahuc, Pierre & Carcillo, Stéphane, 2011. "Is Short-Time Work a Good Method to Keep Unemployment Down?," IZA Discussion Papers 5430, Institute of Labor Economics (IZA).
    4. Alexander Hijzen & Sebastien Martin, 2013. "The role of short-time work schemes during the global financial crisis1 and early recovery: a cross-country analysis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-31, December.
    5. Jeff Borland, 2016. "Wage Subsidy Programs: A Primer," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 19(3), pages 131-144.
    6. Rebecca Cassells & Alan S Duncan, 2020. "Job Keepers and Job Seekers: How many workers will lose and how many will gain?," Bankwest Curtin Economics Centre Report series RB03, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    7. Rebecca Cassells & Alfred Michael Dockery & Alan S Duncan & Daniel Kiely & Astghik Mavisakalyan, 2020. "Potential Job Losses in the COVID-19 Pandemic," Bankwest Curtin Economics Centre Report series RB02, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stephen Duckett, 2022. "Public Health Management of the COVID-19 Pandemic in Australia: The Role of the Morrison Government," IJERPH, MDPI, vol. 19(16), pages 1-32, August.
    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. Graciela Corral de Zubielqui & Howard Harris, 2024. "Why the COVID-19 Crisis Is an Ethical Issue for Business: Evidence from the Australian JobKeeper Initiative," Journal of Business Ethics, Springer, vol. 190(1), pages 123-136, February.
    4. Leonora Risse & Angela Jackson, 2021. "A gender lens on the workforce impacts of the COVID-19 pandemic in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 24(2), pages 111-144.
    5. 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.
    6. James Bishop & Iris Day, 2020. "How Many Jobs Did JobKeeper Keep?," RBA Research Discussion Papers rdp2020-07, Reserve Bank of Australia.

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    More about this item

    Keywords

    JobKeeper; wage subsidy; COVID-19 economic crisis; short-time wage subsidy; temporary wage subsidy;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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