Abstract:

The JobKeeper payment is a wage subsidy to help firms affected by COVID-19 retain their staff. We examine the extent to which JobKeeper cushioned employment losses in the first four months of the program. To do this, we use worker-level data from the Labour Force Survey and an identification strategy that exploits a threshold in eligibility to infer causality. We find that one in five employees who received JobKeeper (and, thus, remained employed) would not have remained employed during this period had it not been for the JobKeeper payment. Given that 3½ million individuals were receiving the payment over the period from April to July 2020, this implies that JobKeeper reduced total employment losses by at least 700,000 over the same period. We discuss the potential sources of bias that might affect our results, some of which stem from the fact that our conclusions are based on a sample of casual employees who may have responded differently to JobKeeper than other workers. Our paper does not consider the longer-run effects of JobKeeper on employment or the indirect channels through which JobKeeper may have affected employment.