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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. 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.
    4. 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.
    5. 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.
    6. Cahuc, Pierre & Carcillo, Stéphane, 2011. "Is Short-time Work a Good Method to Keep Unemployment Down?," CEPR Discussion Papers 8214, C.E.P.R. Discussion Papers.
    7. 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.
    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. 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.
    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. 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.
    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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