Monetary compensation schemes during the COVID-19 pandemic: implications for household incomes, liquidity constraints and consumption across the EU

Michael Christl, Silvia De Poli, Francesco Figari, Tine Hufkens, Chrysa Leventi, Andrea Papini and Alberto Tumino
Additional contact information
Francesco Figari: University of Eastern Piedmont
Tine Hufkens: Joint Research Centre (JRC), European Commission
Alberto Tumino: Joint Research Centre (JRC), European Commission

The Journal of Economic Inequality, 2024, vol. 22, issue 2, No 8, 431 pages

Abstract: Abstract This paper analyses the effect of the COVID-19 pandemic on household disposable income and household demand in the European Union (EU) during 2020, making use of the EU microsimulation model EUROMOD and nowcasting techniques. We show evidence of heterogeneity in the impact of the COVID-19 pandemic on the labour markets in EU Member States, with some countries hit substantially harder than others. Most EU Member States experience a large drop in market incomes, with poorer households bearing the brunt. Tax-benefit systems cushioned significantly the transmission of the shock to the disposable income and the household demand, with monetary compensation schemes playing a major role. Additionally, we show that monetary compensation schemes prevent a significant share of households from becoming liquidity constrained during the pandemic.

Keywords: COVID-19; Inequality; Liquidity constraints; Consumption; Microsimulation; EUROMOD (search for similar items in EconPapers)
Date: 2024
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Working Paper: Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU (2022)
Working Paper: Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU (2022)
Working Paper: Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU (2022)
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DOI: 10.1007/s10888-023-09596-4

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