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

Author

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  • 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
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    References listed on IDEAS

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    Cited by:

    1. Smart, Michael & Kronberg, Matthew & Lesica, Josip & Liu, Huju, 2025. "The employment effects of a pandemic wage subsidy," Journal of Public Economics, Elsevier, vol. 246(C).
    2. 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).
    3. Halima Jibril & Stephen Roper & Mark Hart, 2021. "COVID-19, business support and SME productivity in the UK," Working Papers 005, The Productivity Institute.
    4. Daigo Nakata, 2023. "Emergency Economic Response and Evaluation in the COVID-19 Crisis," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 19(4), pages 1-25, November.
    5. 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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