Christl, Michael De Poli, Silvia Hufkens, Tine Peichl, Andreas Ricci, Mattia
Year of Publication:
JRC Working Papers on Taxation and Structural Reforms No. 04/2021
European Commission, Joint Research Centre (JRC), Seville
In this paper, we investigate the impact of the COVID-19 pandemic on German household income using a micro-level approach. We combine a microsimulation model with labour market transition techniques to simulate the COVID-19 shock on the German labour market. We find the consequences of the labour market shock to be highly regressive with a strong impact on the poorest households. However, this effect is nearly entirely offset by automatic stabilisers and discretionary policy measures. We explore the cushioning effect of these policies in detail, showing that short-time working schemes and especially the one-off payments for children are effective in cushioning the income loss of the poor.