RDP 2020-07: How Many Jobs Did JobKeeper Keep? 9. Conclusion

We find that JobKeeper played an important role in cushioning the decline in employment over the first half of 2020. Our baseline estimate is that one in five JobKeeper recipients would not have stayed employed during this period had it not been for JobKeeper. At the aggregate level, this implies JobKeeper prevented at least 700,000 additional employment relationships being lost in the short term. Overall employment losses would have been twice as large over the first half of 2020 without JobKeeper.

We have emphasised several important assumptions underlying our estimates. These assumptions should be kept in mind, and further work using administrative data sources should be undertaken to confirm our results.

Our analysis is retrospective and short-term in focus. We examine the extent to which JobKeeper supported employment in the first four months of the program. We do not consider the employment effects from August onward (including JobKeeper 2.0), or the effectiveness of the program in alleviating the longer-run effects of labour market scarring. Policymakers should not assume that the short-term effects of the scheme will necessarily persist. Indeed, the international literature suggests that wage subsidies, if maintained too long, can have adverse effects on incentives and impede the reallocation of labour.

A key objective of JobKeeper was to provide income support to business owners and their workers. We do not study this important aspect. Our analysis is also silent on the various indirect channels through which JobKeeper may have affected economic outcomes, such as via second-round demand effects. These general equilibrium effects are not captured in our estimates. By focusing on the direct employment effects alone, our analysis provides a partial, albeit important, evaluation of the scheme.