Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229566
Authors: 
Bruckmeier, Kerstin
Peichl, Andreas
Popp, Martin
Wiemers, Jürgen
Wollmershäuser, Timo
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8748
Abstract: 
The highly dynamic nature of the COVID-19 crisis poses an unprecedented challenge to policy makers around the world to take appropriate income-stabilizing countermeasures. To properly design such policy measures, it is important to quantify their effects in real-time. However, data on the relevant outcomes at the micro level is usually only available with considerable time lags. In this paper, we propose a novel method to assess the distributional consequences of macroeconomic shocks and policy responses in real-time and provide the first application to Germany in the context of the COVID-19 pandemic. Specifically, our approach combines different economic models estimated on firm- and household-level data: a VAR-model for output expectations, a structural labor demand model, and a tax-benefit microsimulation model. Our findings show that as of September 2020 the COVID-19 shock translates into a noticeable reduction in gross labor income across the entire income distribution. However, the tax benefit system and discretionary policy responses to the crisis act as important income stabilizers, since the effect on the distribution of disposable household incomes turns progressive: the bottom two deciles actually gain income, the middle deciles are hardly affected, and only the upper deciles lose income.
Subjects: 
income distribution
inequality
recession
Covid-19
tax-benefit policies
short-time work
business survey
labor demand
microsimulation
JEL: 
D31
E24
E37
H24
J23
Document Type: 
Working Paper

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