The JobKeeper Payment: How Good Are Wage Subsidies?

During the early stages of the COVID-19 pandemic in 2020 the Australian federal government temporarily expanded the level of cash relief available to the working-age population through supplemental benefit payments, a wage subsidy and allowing lump sum withdrawals from private pensions. Here we examine the scope and direct distributional consequences of these measures. Two in five working-age Australians received at least one of these three forms of transfer over a 12-month window. The median recipient had close to half their pre-COVID-19 income 'replaced' by transfers. The programs interacted to create a two-tier welfare safety net that put in place a poverty-alleviating income floor for workers in low-earning occupations and those on unemployment benefits, and provided job certainty and greater direct income support to those with higher incomes. Aggregate weekly incomes were higher during the initial period of COVID-19 than they were pre-COVID-19. Descriptive exercises, such as this, do not provide information about the 'impact' of pandemic policies and are limited to what they directly measure. That noted, we raise an important question for decisionmakers facing future shocks: at what point is there 'too much of a good thing' with crisis cash transfers?

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Too Much of a Good Thing? Australian Cash Transfer Replacement Rates During the Pandemic

Breunig¹,

Sainsbury

2023

Australian Economic Review

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JobKeeper: An Initial Assessment

Borland

Hunt

2023

Australian Economic Review

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We present details of the design and implementation of the 2020-2021 JobKeeper program and review the literature on its impacts. JobKeeper stimulated the macroeconomy and restrained job loss in the downturn. But because the program was not narrowly targeted, the cost per job saved was high and the impact most likely regressive. However, it would not have been possible to devise and implement a more targeted program in the available time, and as it was, JobKeeper was arguably implemented later than needed for maximum effectiveness. We therefore recommend that Australia consider establishing a short-time work program for use in future recessions.

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Australian Government COVID‐19 Business Supports

Watson

Buckingham

2023

Australian Economic Review

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This article documents the considerable economic support provided to businesses by the Australian Government in response to the COVID-19 pandemic. We find that measures were associated with higher levels of business profitability and savings, a strong recovery in payroll jobs and wages, and mixed effects with respect to business dynamism. We formally evaluate the SME Cashflow Boost, finding costs per job-year saved in the vicinity of $72-83,000 ($US51-59,000) over its first year, implying between 400 and 500,000 jobyears saved over this period. Combined with results from previous studies, this suggests between 1.1 and 1.3 million job-years were saved by the SME Cashflow Boost and JobKeeper Payment over their respective first years post-announcement.

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The JobKeeper Payment: How Good Are Wage Subsidies?

Cited by 4 publications

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Too Much of a Good Thing? Australian Cash Transfer Replacement Rates During the Pandemic

Too Much of a Good Thing? Australian Cash Transfer Replacement Rates During the Pandemic

JobKeeper: An Initial Assessment

Australian Government COVID‐19 Business Supports

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