The Impact of the COVID-19 Shock on Labour Income Inequality: Evidence from Italy

Abstract

The spread of the pandemic and the consequent adoption of lockdown measures to prevent infections had severe consequences for business activity and employment. By using data from the Italian Labour Force Survey, this paper simulates the effect of the COVID-19 crisis on the dynamics and distribution of equivalized labour income in the first two quarters of 2020. Moreover, it assesses the effectiveness in smoothing labour income losses of the social insurance benefits that were in place before the crisis and of the temporary measures adopted by the Italian Government to face it. We find that the economic repercussions of the COVID-19 shock impacted low-income households more heavily than higher income families, implying a substantial increase in labour income inequality. However, our results show that the social insurance benefits temporarily introduced by the Italian Government were able, at least in the short term, to compensate for these income losses and for the increased inequality significantly more than the pre-crisis measures.

Liquidity‐poor Households in the Midst of the COVID‐19 Pandemic

“…The unusual growth of savings invested in deposits during the crisis may be then the result of (a combination of) different potential reasons: (i) a consumption drop because of lockdown measures ( forced ); (ii) an infection‐concern motive that caused consumers to refrain from many purchases where a physical proximity is involved ( fear ); (iii) precautionary reasons arising from the increased uncertainty caused by the pandemic ( precautionary ); (iv) a drop in income to which households reacted by reducing consumption more than proportionally ( income ). The surge in deposits for the lower end of the liquidity ladder can also be traced back to those motives but, for such households, a crucial role may have also been played by the increased ability to save, thanks to government support measures ( support ) that (partly) protected the income of households that suffered falls in earnings (Carta and De Philippis, 2021 ).…”

Longitudinal changes in home confinement and mental health implications: A 17-month follow-up study in England during the COVID-19 pandemic

“…Another factor that was associated with higher odds of being home-confined persistently is low household income. As we only controlled for employment status at the baseline, it is probable that people from low-income households were likely to be in jobs that were more subject to unemployment and furlough schemes during the follow-up [30,31], which could contribute to why they were less likely to have daily reasons to leave the house to go to work. But it does not fully explain why their home confinement would be persistently higher.…”

Individual factors influencing public’s perceptions about the importance of COVID-19 immunity certificates: a cross-sectional online questionnaire survey in the UK

“…The COVID-19 pandemic and subsequent lockdown measures have been difficult for many people leading to deceased mental wellbeing[27–32], unemployment and/or lower income[33,34]. Therefore, to control for the possibility of attitudes towards the primary outcome measure streaming from feelings of hopelessness, we measured perceived mental wellbeing and net income now compared to before the beginning of the pandemic using a 5-point Likert scale ranging from 1(“Much worse”/”Much lower”) to 5(“Much better”/”Much higher”).…”