Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/228411 
Year of Publication: 
2020
Series/Report no.: 
EUROMOD Working Paper No. EM12/20
Publisher: 
University of Essex, Institute for Social and Economic Research (ISER), Colchester
Abstract: 
We analyse the UK policy response to Covid-19 and its impact on household incomes, as of late April 2020, using microsimulation methods. We estimate that households will lose a substantial share of their net income (8% on average). The proportional losses are largest for higher-income families. However, the overall impact of the crisis on income inequality is small. Earnings subsidies (Coronavirus Job Retention Scheme) will protect household finances and provide the main insurance mechanism during the crisis. Besides subsidies, Covid-related benefit increases and tax-benefit automatic stabilisers will play an important role in mitigating the shocks, underlining the importance of tax-benefit design in protecting household incomes during economic downturns. Analysing how a near-decade of austerity has affected the UK safety net, we find that, even after the extra benefit spending, the ability of the 2020 system to provide insurance against the shocks would be similar to the 2011 pre-austerity system.
Subjects: 
Covid-19
income distribution
earnings subsidies and tax-benefit policies
JEL: 
D31
E24
H24
Document Type: 
Working Paper

Files in This Item:
File
Size
933.38 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.