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Covid-19 wage subsidy support and effects

Author

Listed:
  • David C. Maré

    (Motu Economic and Public Policy Research)

  • Dean R. Hyslop

    (Motu Economic and Public Policy Research)

Abstract

This note provides a brief preliminary analysis of the short run impact of COVID-19 and the government’s Covid Wage Subsidy (CWS) response on labour market flows. We focus on two issues. First, to examine the selectivity of the CWS, we describe the characteristics of firms and of workers who did and did-not receive subsidy payments. Second, to gauge how the pandemic and the CWS affected the labour market, we describe two aspects of the adjustment process: the job-turnover rates for workers in subsidised and non-subsidised firms; and trends in the transition rates between non-employed in subsidised and non-subsidised employment. We find that there was a larger drop in job turnover rates in subsidised than non-subsidised firms, but the excess turnover in subsidised firms had return to pre-lockdown levels by September, while that in non-subsidised firms remained low.

Suggested Citation

  • David C. Maré & Dean R. Hyslop, 2021. "Covid-19 wage subsidy support and effects," Working Papers 21_02, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:21_02
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    File URL: https://motu-www.motu.org.nz/wpapers/21_02.pdf
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    More about this item

    Keywords

    Covid; wage subsidy; worker flows;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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