Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287368 
Year of Publication: 
2021
Citation: 
[Journal:] The Journal of Economic Inequality [ISSN:] 1573-8701 [Volume:] 19 [Issue:] 3 [Publisher:] Springer US [Place:] New York, NY [Year:] 2021 [Pages:] 459-487
Publisher: 
Springer US, New York, NY
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
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size





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