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Welfare resilience at the onset of the COVID-19 pandemic in a selection of European countries: impact on public finance and household incomes

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  • Valentinova Tasseva, Iva
  • Cantó-Sánchez, Olga
  • Figari, Francesco
  • Fiorio, Carlo
  • Kuypers, Sarah
  • Marchal, Sarah
  • Romaguera de la Cruz, Marina
  • Verbist, Gerlinde

Abstract

This paper assesses the impact on household incomes of the COVID-19 pandemic and governments’ policy responses in April 2020 in four large and severely hit European countries: Belgium, Italy, Spain and the UK. We provide comparative evidence on the level of relative and absolute welfare resilience at the onset of the pandemic, by creating counterfactual scenarios using the European-wide tax-benefit model EUROMOD combined with COVID-related household surveys and timely labour market data. We find that income poverty increases in allcountries due to the pandemic while inequality remains broadly the same. Differences in the impact of policies across countries arise from four main sources: the asymmetric dimension of the shock by country, the different protection offered by each tax-benefit system, the diverse design of discretionary measures and the differences in the household level circumstances and living arrangements of individuals at risk of income loss in each country.

Suggested Citation

  • Valentinova Tasseva, Iva & Cantó-Sánchez, Olga & Figari, Francesco & Fiorio, Carlo & Kuypers, Sarah & Marchal, Sarah & Romaguera de la Cruz, Marina & Verbist, Gerlinde, 2021. "Welfare resilience at the onset of the COVID-19 pandemic in a selection of European countries: impact on public finance and household incomes," Centre for Microsimulation and Policy Analysis Working Paper Series CEMPA5/21, Centre for Microsimulation and Policy Analysis at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:cempwp:cempa5-21
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    References listed on IDEAS

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    1. Michael Christl & Silvia Poli & Tine Hufkens & Andreas Peichl & Mattia Ricci, 2023. "The role of short-time work and discretionary policy measures in mitigating the effects of the COVID-19 crisis in Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 1107-1136, August.
    2. Denisa M. Sologon & Cathal O’Donoghue & Iryna Kyzyma & Jinjing Li & Jules Linden & Raymond Wagener, 2022. "The COVID-19 resilience of a continental welfare regime - nowcasting the distributional impact of the crisis," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 777-809, December.

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