Essentially unemployed: potential implications of the COVID-19 crisis and fiscal response on income inequality

Ansel Schiavone

Review of Social Economy, 2023, vol. 81, issue 3, 469-492

Abstract: I analyze the impact of the CARES Act unemployment subsidy on US income and inequality in the first month of the COVID-19 crisis using March-April Current Population Survey data. I then use monthly industry unemployment data to extend this panel to July. Next, I estimate the impact of the expiration of the CARES Act subsidy on average income and inequality. Finally, I extend the panel to November to simulate the effects of proposed HEALS and HEROES Acts. I find the CARES Act subsidy was effective at increasing average income above pre-crisis levels and reducing inequality. The expiration of the CARES Act subsidy caused a decrease in average income and increase in inequality relative to pre-crisis levels. I find the proposed HEALS legislation will return inequality to near pre-crisis levels, while the proposed HEROES Act will result in higher income and lower inequality than existed before the crisis.

Date: 2023
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DOI: 10.1080/00346764.2021.1890194

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