This paper investigates how the tax-transfer system replaces lost income after job loss. It uses e61’s tax calculator to estimate the lost income replaced by benefit payments and lower taxes paid following job loss (the income replacement rate). The paper also explores what will happen to replacement rates if payment rates were changed.

One common critique of the unemployment rate in Australia is that it understates the true level of spare capacity in the economy by excluding individuals who are willing and able to work, but are currently classified as Not in the Labour Force (NILF). The author of this paper outlines some alternative approaches for measuring unemployment.