The rising tide lifts all boats? Income support measures for employees and self-employed during the COVID-19 pandemic

Michael Christl, Silvia De Poli () and Viginta Ivaškaitė-Tamošiūnė
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Michael Christl: Universidad Loyola Andalucia and Global Labor Organization
Silvia De Poli: Universidad Complutense de Madrid
Viginta Ivaškaitė-Tamošiūnė: Vilnius University

International Tax and Public Finance, 2025, vol. 32, issue 6, No 9, 1905-1931

Abstract: Abstract This paper examines the extent to which fiscal policy protected household incomes in the second year of the COVID-19 pandemic in EU countries. Using microsimulation techniques and detailed Eurostat data, we analyse this impact separately for employees and the self-employed. We show that while on average income protection was similar for employees and the self-employed at the EU level, the heterogeneity both between and within countries was much higher for self-employed households in 2021. For employees, both monetary compensation schemes and unemployment benefits played a similar role in absorbing the income shock, whereas for the self-employed it was mainly monetary compensation schemes and much less so unemployment benefits that stabilised their income. Overall, we find that monetary compensation schemes, together with automatic stabilisers, absorbed a substantial part (67%) of the market income shock in 2021, albeit with a reduced cushioning effect compared to the previous year (74%). Monetary compensation schemes alone account for almost a third of this cushioning effect in 2021. Our paper underlines the importance of targeted policies to ensure comprehensive support for vulnerable households amid ongoing economic uncertainties.

Keywords: COVID-19; Self-employed; Income stabilisation; Microsimulation; EUROMOD (search for similar items in EconPapers)
JEL-codes: D31 E24 H24 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10797-025-09896-7

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