After yesterday’s pitch and related tweet thread, I was keen to dig a bit more into elements of the first note from this release – Income Support Gaps: When JobSeekers don’t seek jobs. The research note can be found here, and a bundle of supplementary material is here.
What is “fair” is complicated and economists have a habit of making it boring (i.e. me here). This leads economists to run away from discussing issues that relate to fairness, towards something where we can make more solid conclusions. However, fairness matters so we should be able to communicate the trade-offs that exist in these types of policy issues.
In this way economists can still add value without telling people what to do – and this is by clearly articulating what a policy is doing and describing the related trade-offs. This first note is simply about defining who receives the JobSeeker Payment (read unemployment benefit) in Australia and who doesn’t. So let’s chat about it.
JobSeeker ain’t just about people looking for work
Look at this mate.
Now this isn’t just Aussie specific (although Bradbury and Whiteford give a great description of it here). We also see this in New Zealand (here and here) and many other OECD countries. Actually, lets look at a version of the OECD plot:
Look, in many ways the Australian and New Zealand obsession with calling this payment a job related payment is a marketing job that is intended to make us view the payment (the JSP, or JobSeeker Payment) in a certain way – there are three times as many people looking for work and not receiving the JSP as there are looking and receiving. And there are twice as many people receiving the JSP and not looking for work as people receiving and looking.
In truth non-JobSeekers are excluded as the system is also trying to make sure people have a minimum living standard – even if they aren’t on the hunt for work at this very minute. While a group of JobSeekers are excluded because they are believed to have sufficient means to look after themselves – so if we buy this Iron Triangle view of welfare we would rather not pay to these people.
Digging into means testing
I’m from New Zealand – where means testing has been quite a harsh beast for a while. As a result, my prior when digging into the Australia data was that it would be equally harsh and that there would be a lot of people excluded by these rules (rather than due to simply not taking up benefits they were entitled to).
I’ve learned that the Australian system is quite different – and so the rules aren’t quite as sharp as back in New Zealand. However, the application of the rules does explain a lot of non-receipt – something that is shared across Australasia, but is different to overseas.
In both countries the eligibility criteria are excluding a bunch of people who are looking for work because they have “sufficient means to look after themselves” – but where that line is drawn is quite different.
Rightio – but how do we actually evaluate that claim? If I’m going to be thinking about policy I’ll want a way to evaluate this using data and beautiful economic frameworks – otherwise its easy to end up apply rules that have unintended consequences. This is something we dig into in the next note, which I’ll save for tomorrow 😉