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Lockdown, Earnings Losses and Household Asset Buffers in Europe

Brian Nolan (), Juan C. Palomino, Sarah Kuypers and Ive Marx

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: Measures taken to contain the spread of COVID-19 affect some workers' capability to work and hence earnings more than others. The initial impact may be mitigated, for instance by relying on savings and assets. Access to these buffers may, however, also vary considerably within and across countries. In this paper we estimate for Euro Area workers their potential earnings losses related to the COVID-19 labour supply shock (before state responses) using the Lockdown Working Ability Index and relate this to households' savings and assets observed in the Eurosystem Household Finance and Consumption Survey. We find that, on average across the Euro Area, affected households could only offset half of their losses by relying on their liquid assets, ranging from 25% in some countries to 80% in others. We also find that liquid asset buffers of households in the bottom earnings quintiles are often insufficient to prevent them from falling below a low earnings threshold.

Keywords: earnings; assets; wealth; pandemic; lockdown (search for similar items in EconPapers)
JEL-codes: D31 E24 G51 J21 J31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021-04
New Economics Papers: this item is included in nep-eec, nep-isf and nep-mac
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Journal Article: Lockdown, Earnings Losses and Household Asset Buffers in Europe (2022) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2021-10

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