DP16755 Did The Australian JobKeeper Program Save Jobs by Subsidizing Temporary Layoffs?

Author(s): Jeff Borland, Jennifer Hunt
Publication Date: November 2021
Keyword(s): COVID-19, JobKeeper, temporary layoffs, Wage subsidy
JEL(s): J08, J20
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16755

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.