Economic Resilience in a Pandemic: Did COVID-19 Policy Effects Override Industry Diversity Impacts in Australia?

Abstract

The industry diversity thesis of economic resilience to economic shocks is embedded in community development policy across Australia. The idea being that in the event of an economic shock some industries will prove more recession-proof than others. The greater the industry diversity, the greater the likelihood of off-setting industry effects, resulting in greater economic resilience. The COVID-19 pandemic and the associated restrictions created a unique natural experiment to explore whether the industry diversity thesis holds true under the conditions of a global health pandemic. In this policy paper, we use JobKeeper applications as a proxy for decreased economic resilience. We explore if Australian local government areas (LGAs) with higher industry diversity had less necessity for JobKeeper. We also briefly consider if concentrations of certain industries acted as a better economic buffer to the COVID-19 economic shock. We observe that as diversity increases, economic resilience strengthens except for Victoria (where the association is inverted). This observation has important implications for current and future policy formation and implementation across all layers of government.