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Did The Australian JobKeeper Program Save Jobs by Subsidizing Temporary Layoffs?

Author

Listed:
  • Jeff Borland

    (Department of Economics, the University of Melbourne)

  • Jennifer Hunt

    (Rutgers University | NBER)

Abstract

We analyze the JobKeeper lump-sum wage subsidy introduced by the Australian government in response to the COVID-19 pandemic, paying particular attention to the role of temporary layoffs in saving jobs. Although temporary layoffs were widely used, we find that recalls of workers on temporary layoff played only a small role in the early recovery. Of approximately 300,000 temporarily laid off, only about 100,000 were recalled in the initial months of recovery. In this time total employment grew by 440,000, reversing one-half of losses from the first months of the pandemic. This suggests either that temporary layoffs were very long, or that many workers on temporary layoffs were never recalled.

Suggested Citation

  • Jeff Borland & Jennifer Hunt, 2021. "Did The Australian JobKeeper Program Save Jobs by Subsidizing Temporary Layoffs?," Melbourne Institute Working Paper Series wp2021n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2021n26
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    References listed on IDEAS

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    1. James Bishop & Iris Day, 2020. "How Many Jobs Did JobKeeper Keep?," RBA Research Discussion Papers rdp2020-07, Reserve Bank of Australia.
    2. Giulia Giupponi & Camille Landais, 2023. "Subsidizing Labour Hoarding in Recessions: The Employment and Welfare Effects of Short-time Work," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(4), pages 1963-2005.
    3. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    4. Michael C. Burda & Jennifer Hunt, 2011. "What Explains the German Labor Market Miracle in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 273-335.
    5. 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.
    6. Landais, Camille & Giupponi, Giulia, 2018. "Subsidizing Labor Hoarding in Recessions: The Employment & Welfare Effects of Short Time Work," CEPR Discussion Papers 13310, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:

    1. Caroline Fyfe & Dave Maré & Phoebe Taptiklis, 2023. "COVID-19 Wage Subsidy: Outcome evaluation - Value for Money," Working Papers 23_04, Motu Economic and Public Policy Research.
    2. Lazzari, Ester & Reimondos, Anna & Gray, Edith, 2022. "Childbearing desires before and after the Covid-19 outbreak in Australia: Who changed their attitudes toward having a first or additional child?," SocArXiv qbgmp, Center for Open Science.
    3. Viet H. Nguyen & Tim Robinson & Sarantis Tsiaplias, 2022. "The Australian Economy in 2021–2022: The Virus Strikes Back," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 5-24, March.
    4. Dean Hyslop & Dave Maré & Shannon Minehan, 2023. "COVID-19 Wage Subsidy: Outcome evaluation," Working Papers 23_03, Motu Economic and Public Policy Research.
    5. Timothy Watson & Paul Buckingham, 2023. "Australian Government COVID‐19 Business Supports," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(1), pages 124-140, March.

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    More about this item

    Keywords

    Wage subsidy; temporary layoffs; JobKeeper;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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