Earnings business cycles: The Covid recession, recovery, and policy response

Jeff Larrimore, Jacob Mortenson and David Splinter

Journal of Public Economics, 2023, vol. 225, issue C

Abstract: Using a panel of tax data, we follow individuals’ earnings over business cycles. Compared to prior recessions, the Covid policy response and recovery were more progressive. Among workers starting in the bottom quintile, median real earnings including fiscal relief increased 66 percent in 2020—after the prior two recessions this measure decreased. This resulted from substantial Covid-era stimulus payments and unemployment insurance. With fiscal relief ending, bottom-quintile earnings in 2022 returned near pre-Covid levels. Among those starting in the top quintile, median real market earnings rose in 2020. Top-quintile earnings subsequently fell, although by less than around previous recessions.

Keywords: Covid-19; Wages; Earnings; Stimulus checks; Unemployment insurance; Countercyclical policy; Government transfers (search for similar items in EconPapers)
JEL-codes: D31 E24 H53 J30 J65 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Earnings Business Cycles: The Covid Recession, Recovery, and Policy Response (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:225:y:2023:i:c:s0047272723001652

DOI: 10.1016/j.jpubeco.2023.104983

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