Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU
JRC Working Papers on Taxation and Structural Reforms No 03/2022
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 significantly cushion the shock to disposable incomes and household demands, 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.
CHRISTL Michael;
DE POLI Silvia;
FIGARI Francesco;
HUFKENS Tine;
LEVENTI Chrysa;
PAPINI Andrea;
TUMINO Alberto;
Christl, M., De Poli, S., Figari, F., Hufkens, T., Leventi, C., Papini, A. and Tumino, A., Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU, European Commission, 2022, JRC128996.
2022-03-31
European Commission
JRC128996
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