The impact of COVID-19 on households´ income in the EU

Abstract

This analysis makes use of economic forecasts for 2020 issued by the European Commission in Autumn 2019 and Spring 2020, and of a counterfactual under a no-policy change assumption, to analyse the impact of the COVID-19 crisis on EU households´ income. Additionally, our analysis assesses the cushioning effect of discretionary fiscal policy measures taken by the EU Member States. We find that the COVID-19 pandemic is likely to affect significantly households’ disposable income in the EU, with lower income households being more severely hit. However, our results show that due to policy intervention, the impact of the crisis is expected to be similar to the one experienced during the 2008–2009 financial crisis. In detail, our results indicate that discretionary fiscal policy measures will play a significant cushioning role, reducing the size of the income loss (from −9.3% to −4.3% for the average equivalised disposable income), its regressivity and mitigating the poverty impact of the pandemic. We conclude that policy interventions are therefore instrumental in cushioning against the impact of the crisis on inequality and poverty.

The Unequal Effect of the COVID-19 Pandemic on the Labour Market and Income Inequality in China: A Multisectoral CGE Model Analysis Coupled with a Micro-Simulation Approach

“…The sudden reduction or halt in remittance flows from migrant workers would further reduce the income of rural households [21,35]. On the other hand, as the pandemic has a more significant negative impact on the low-income households than their advantaged counterparts, it may exacerbate income inequality [17][18][19][36][37][38]. Almeida et al [19] found that the COVID-19 pandemic was likely to significantly affect households' disposable income in the European Union, with lower-income households being more severely hit.…”

“…On the other hand, as the pandemic has a more significant negative impact on the low-income households than their advantaged counterparts, it may exacerbate income inequality [17][18][19][36][37][38]. Almeida et al [19] found that the COVID-19 pandemic was likely to significantly affect households' disposable income in the European Union, with lower-income households being more severely hit. Delaporte, Escobar, and Pea [37] found that the pandemic would deteriorate the income of low-income households more severely and push numerous households into poverty.…”

“…Furthermore, through influencing the labour market, the COVID-19 pandemic may have a differing impact on the income of different households. As the employment and earnings of labourers with low education levels are more significantly reduced, the pandemic would have a greater negative impact on the income of low-income households than their more advantaged counterparts [17][18][19]. Strict disease control measures hindered migrant workers from returning to work, reduced the income of rural households, and aggravated the income disparity between rural and urban households [8,20,21].…”

Association between perceived decline in family income due to COVID-19 and alcohol consumption among Korean adolescents

“…To deal with the pandemic, all OECD member countries introduced social distancing and complete lockdowns, thereby impacting incomes and expenses of families, as well as exacerbating poverty and wage inequality ( Celik et al, 2020 ; Almeida et al, 2021 ). Family financial insecurity due to the COVID-19 pandemic caused an acute threat to the well-being of children and families ( Prime et al, 2020 ).…”

The Social Dimension of Security: The Dichotomy of Respondents’ Perceptions during the COVID-19 Pandemic

“…This article is the result of extensive research on people's situations during the COVID-19 pandemic. This period has become the quintessence of living under precarious conditions [27][28][29][30], when income, work, and future are the most serious causes of people's anxiety [31][32][33][34][35][36]. There are also problems with unavailable housing [37], and material deprivation has become commonplace [38][39][40][41][42][43].…”