Lockdown, Earnings Losses and Household Asset Buffers in Europe¹

Abstract

Measures taken to contain the spread of COVID‐19 affected some workers' capability to work and hence earning more than others. The initial impact may have been mitigated, for instance by relying on savings and assets, but access to these buffers likely varied within and across countries. In this article we estimate COVID‐19 potential earnings losses 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, without government support, households in the Euro Area could only offset on average half of their losses by relying on liquid assets and almost half would deplete their savings in doing so, although there is significant cross‐country variation. When considering the effect of income support policies, liquid assets cover on average 65 percent of the remaining losses and still 20 percent would exhaust their liquid assets on average in the Euro Area.

Wealth Stratification and the Insurance Function of Wealth

“…Wealth as an additional resource to compensate for the negative consequences of adverse life events might be especially relevant in a nationwide crisis such as the Covid-19 pandemic (cf. Kuypers et al, 2022).…”

Os efectos iniciais da Covid-19 nas desigualdades de renda en Galicia e a súa distribución na sociedade

“…Analizando o ámbito europeo, Kuypers et al (2022) describen como as políticas de substitución de renda (ou prestacións sociais) cubriron aproximadamente o 65% das perdas xeradas pola pandemia. Porén, a capacidade do Estado do benestar de cada país e rexión é distinta, o que leva a diferentes resultados, como indican outros traballos (Cantó et al, 2021;Christl et al, 2022;.…”

The Wealth (Disadvantage) of Single-Parent Households

“…Household wealth plays a key role in coping with economic shocks and with the intergenerational transmission of advantage and disadvantage. The vulnerability associated with having little or no property wealth or financial buffer to fall back on is particularly salient in a major economic shock such as the ongoing COVID-19 pandemic crisis (Kuypers et al forthcoming). The long-term implications of parental wealth or its absence for progress through the education system and the labor market are also now better understood (Pfeffer 2018).…”