Estimating the fiscal costs of long-term jobless families in Australia

Despite substantial costs to society associated with the adverse consequences of joblessness, studies estimating actual costs are rare. This paper identifies the main costs to the Government of long-term jobless families in Australia. The costs were split into three groups: immediate support costs, immediate opportunity costs, and indirect/intergenerational costs. Using a microsimulation model, the paper estimates the fiscal costs, which include immediate support costs such as the welfare system, and the immediate opportunity costs such as potential revenue from the tax system. We estimate that welfare payments and lost taxation revenue from long-term joblessness cost the Government AU$5.55 billion per year.