The distributional impact of the crisis in Greece

Chrysa Leventi () and Manos Matsaganis ()
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Chrysa Leventi: Athens University of Economics & Business
Manos Matsaganis: Athens University of Economics and Business

No 1123, DEOS Working Papers from Athens University of Economics and Business

Abstract: The severe economic crisis affecting Greece is widely expected to have a significant social impact in terms of greater inequality and increased poverty. We provide an early assessment of whether (and to what extent) this is the case. More specifically, we distinguish between two inter-related factors: on the one hand, the austerity measures taken to reduce fiscal deficits; on the other hand, the wider recession. Using the European tax-benefit model EUROMOD we attempt to quantify the distributional implications of both. With respect to the austerity measures, we focus on the changes introduced in spring 2010 in income tax, public sector pay and pension benefits. With respect to the wider recession, we attempt to estimate the distributional impact of the recent rise in unemployment by adjusting the model���¢�¯�¿�½�¯�¿�½s input dataset in the light of recent Labour Force Survey data. We simulate the (ceteris paribus) impact of these changes on the distribution of incomes, while also estimating how the total burden of the crisis is shared across income groups, taking into account tax evasion and benefit non take up. We conclude by discussing the methodological pitfalls and policy implications of our research.

Keywords: Austerity; Greece; inequality; poverty; microsimulation (search for similar items in EconPapers)
JEL-codes: C81 H55 I3 (search for similar items in EconPapers)
Date: 2011-05-20
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