Income Declines during COVID-19

Jeff Larrimore, Jacob Mortenson and David Splinter

AEA Papers and Proceedings, 2022, vol. 112, 340-44

Abstract: The COVID-19 recession caused regressive market income changes in the United States, with large losses more frequent than during the Great Recession and more concentrated at the bottom of the distribution. Progressive taxes and transfers, especially from expanded unemployment insurance benefits and stimulus checks, dramatically offset these declines. We use administrative tax data to show that public policies made large annual tax-unit level income declines in 2020 less common than during the Great Recession, as well as 2019, an expansionary year. These policies stabilized incomes over the entire distribution, but this effect was strongest among those starting with low incomes.

JEL-codes: D31 E32 E63 I12 J65 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1257/pandp.20221042

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