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Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU

Michael Christl (), Silvia De Poli, Francesco Figari (), Tine Hufkens, Chrysa Leventi (), Andrea Papini () and Alberto Tumino ()
Additional contact information
Alberto Tumino: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No 2022-03, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre (Seville site)

Abstract: This paper analyses the effect of the COVID-19 pandemic on household disposable income and household demand in the European Union (EU), making use of the EU microsimulation model EUROMOD and nowcasting techniques. We show evidence of heterogeneity in the impact of the COVID-19 pandemic on the labour markets in EU Member States, with some countries hit substantially harder than others. Most EU Member States experience a large drop in market incomes in 2020, with poorer households hit the hardest. Tax-benefit systems cushioned significantly the transmission of the shock to the disposable income and the household demand, with monetary compensation schemes playing a major role. Additionally, we show that monetary compensation schemes prevent a significant share of households from becoming liquidity constrained during the pandemic.

Keywords: COVID-19; Inequality; Microsimulation; EUROMOD (search for similar items in EconPapers)
JEL-codes: D31 E24 H24 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-eec and nep-mac
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Working Paper: Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU (2022) Downloads
Working Paper: Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU (2022) Downloads
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