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The impact of COVID-19 on households' income in the EU
[journal article]
Abstract This analysis makes use of economic forecasts for 2020 issued by the European Commission in Autumn 2019 and Spring 2020, and of a counterfactual under a no-policy change assumption, to analyse the impact of the COVID-19 crisis on EU households' income. Additionally, our analysis assesses the cushion... view more
This analysis makes use of economic forecasts for 2020 issued by the European Commission in Autumn 2019 and Spring 2020, and of a counterfactual under a no-policy change assumption, to analyse the impact of the COVID-19 crisis on EU households' income. Additionally, our analysis assesses the cushioning effect of discretionary fiscal policy measures taken by the EU Member States. We find that the COVID-19 pandemic is likely to affect significantly households' disposable income in the EU, with lower income households being more severely hit. However, our results show that due to policy intervention, the impact of the crisis is expected to be similar to the one experienced during the 2008–2009 financial crisis. In detail, our results indicate that discretionary fiscal policy measures will play a significant cushioning role, reducing the size of the income loss (from -9.3% to -4.3% for the average equivalised disposable income), its regressivity and mitigating the poverty impact of the pandemic. We conclude that policy interventions are therefore instrumental in cushioning against the impact of the crisis on inequality and poverty.... view less
Keywords
EU; Europe; income; income distribution; epidemic; household income; fiscal policy; inequality; unemployment; poverty; wage subsidies
Classification
General Sociology, Basic Research, General Concepts and History of Sociology, Sociological Theories
Income Policy, Property Policy, Wage Policy
Economic Policy
Health Policy
Free Keywords
COVID-19; Earnings subsidies; EU-SILC
Document language
English
Publication Year
2021
Page/Pages
p. 413-431
Journal
The Journal of Economic Inequality, 19 (2021) 3
Issue topic
Special Issue: COVID-19: a great equalizer? The pandemic and economic inequality
DOI
https://doi.org/10.1007/s10888-021-09485-8
ISSN
1573-8701
Status
Published Version; peer reviewed