Zombie businesses during the COVID-19 pandemic in Australia
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PhD Seminar (Econ)
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While zombie businesses were more likely to access government subsidies, they also experienced lower wage growth, similar headcount growth and higher exit rates. In turn, the creative destruction process, where inefficient businesses grow slower and are less likely to survive, was still at play despite the policy support during the pandemic. However, there is some evidence of a temporary slowing in the pace of creative destruction in 2020 amid the imposition of mobility restrictions and business support measures. The results underscore the productivity benefits of the timely withdrawal of policy support to prevent long-term structural issues and enable resource allocation.
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