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COVID-19 labour market shocks and their inequality implications for financial wellbeing

Ferdi Botha, John de New, Sonja de New, David Ribar () and Nicolas Salamanca ()

No 661, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: Using an online survey of Australian residents, we elicit the potential impacts of COVID-19 related labour market shocks on a validated measure of financial wellbeing. Experiencing a reduction in hours and earnings, entering into unemployment or having to file for unemployment benefits during the pandemic are strongly and significantly associated with decreases in financial wellbeing of 29% or 18 points on the financial wellbeing scale of 0-100, despite various government measures to reduce such effects. Unconditional quantile regression analyses indicate that the negative COVID-19 labour market effects are felt the most by people in the lowest percentiles of the financial wellbeing distribution. Counterfactual distribution regressions indicate a shifting of the financial wellbeing distribution leftwards brought on by those suffering any of the above-mentioned labour market shocks, indicating potential significant increases in financial wellbeing disadvantage and inequality.

Keywords: Financial wellbeing; COVID-19; unemployment; earnings reduction; inequality (search for similar items in EconPapers)
JEL-codes: D14 D39 J65 G51 D63 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-lab
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