IDEAS home Printed from https://ideas.repec.org/a/ipf/psejou/v45y2021i4p517-541.html
   My bibliography  Save this article

The impact of the COVID-19 crisis on income distribution under different protection schemes: the case of Spain

Author

Listed:
  • Gonzalo Gomez Bengoechea

    (Universidad Pontificia Comillas - ICADE, Madrid, Spain)

Abstract

I use household survey data to microsimulate the impact of the COVID-19 crisis on income distribution in Spain. I estimate the cost of potential lockdowns under three different low-income public protection schemes. Results show that although the COVID-19 shock has reduced income for all deciles of the income distribution, the losses are not uniformly distributed. The worst economic effects of the pandemic are not on the poorest, but on individuals in the middle and wealthy groups of the ex-ante income distribution. Low-income benefits help to moderate income losses and to curb poverty and inequality at various levels. It might be necessary to raise taxes and to resort to expenditure reducing policies to maintain protection in the context of contraction and lower government revenues.

Suggested Citation

  • Gonzalo Gomez Bengoechea, 2021. "The impact of the COVID-19 crisis on income distribution under different protection schemes: the case of Spain," Public Sector Economics, Institute of Public Finance, vol. 45(4), pages 517-541.
    • Handle: RePEc:ipf:psejou:v:45:y:2021:i:4:p:517-541
    DOI: 10.3326/pse.45.4.6
    as

    Download full text from publisher

    File URL: http://www.pse-journal.hr/upload/files/pse/2021/4/6.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.3326/pse.45.4.6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a tool for evaluating redistribution policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 77-106, April.
    2. François Bourguignon, 2011. "Non-anonymous growth incidence curves, income mobility and social welfare dominance," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 605-627, December.
    3. Lawrence M. Kahn, 2012. "Labor market policy: A comparative view on the costs and benefits of labor market flexibility," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 94-110, December.
    4. Anonymous, 2014. "Introduction to the Issue," Journal of Wine Economics, Cambridge University Press, vol. 9(1), pages 1-2, May.
    5. Jeehoon Han & Bruce D. Meyer & James X. Sullivan, 2020. "Income and Poverty in the COVID-19 Pandemic," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 85-118.
    6. Branko Milanovic (ed.), 2012. "Globalization and Inequality," Books, Edward Elgar Publishing, number 14151.
    7. Sundaram Asha, 2018. "Richard Baldwin: The Great Convergence: Information Technology and the New Globalization," New Global Studies, De Gruyter, vol. 12(2), pages 297-300, July.
    8. Martin Ravallion, 2003. "Measuring Aggregate Welfare in Developing Countries: How Well Do National Accounts and Surveys Agree?," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 645-652, August.
    9. Immervoll, Herwig & Richardson, Linda, 2011. "Redistribution Policy and Inequality Reduction in OECD Countries: What Has Changed in Two Decades?," IZA Discussion Papers 6030, Institute of Labor Economics (IZA).
    10. Nora Lustig & Valentina Martinez Pabon & Federico Sanz & Stephen D. Younger, 2020. "The Impact of COVID-19 Lockdowns and Expanded Social Assistance on Inequality, Poverty and Mobility in Argentina, Brazil, Colombia and Mexico," Working Papers 558, ECINEQ, Society for the Study of Economic Inequality.
    11. Nora Lustig & Carola Pessino & John Scott, 2014. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay: Introduction to the Special Issue," Public Finance Review, , vol. 42(3), pages 287-303, May.
    12. Sundaram Asha, 2018. "Richard Baldwin: The Great Convergence: Information Technology and the New Globalization," New Global Studies, De Gruyter, vol. 12(2), pages 297-300, July.
    13. Michael Förster & Peter Whiteford, 2009. "How much Redistribution do Welfare States Achieve? The Role of Cash Transfers and Household Taxes," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(03), pages 34-41, October.
    14. Christoph Lakner & Daniel Gerszon Mahler & Mario Negre & Espen Beer Prydz, 2022. "How much does reducing inequality matter for global poverty?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 559-585, September.
    15. Luis Ayala & José María Arranz & Carlos García‐Serrano & Lucía Martínez‐Virto, 2021. "The effectiveness of minimum income benefits in poverty reduction in Spain," International Journal of Social Welfare, John Wiley & Sons, vol. 30(2), pages 152-169, April.
    16. Gonzalo Gómez Bengoechea, 2020. "The Impact of the COVID-19 Crisis on Income Distribution Under Different Protection Schemes: the Case of Spain," Commitment to Equity (CEQ) Working Paper Series 102, Tulane University, Department of Economics.
    17. Anonymous, 2014. "Introduction to the Issue," Journal of Wine Economics, Cambridge University Press, vol. 9(2), pages 109-110, August.
    18. Nora Lustig & Valentina Martinez Pabon, 2020. "The Impact of COVID-19 Economic Shock on Inequality and Poverty in Mexico," Working Papers 2014, Tulane University, Department of Economics.
    19. Michael Förster & Peter Whiteford, 2009. "How much Redistribution do Welfare States Achieve? The Role of Cash Transfers and Household Taxes," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(3), pages 34-41, October.
    20. repec:ces:ifodic:v:7:y:2009:i:3:p:14567070 is not listed on IDEAS
    21. Angus Deaton, 2021. "COVID-19 and Global Income Inequality," NBER Working Papers 28392, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eichhorst, Werner & Bonin, Holger & Krause-Pilatus, Annabelle & Marx, Paul & Dolls, Mathias & Lay, Max, 2023. "Minimum Income Support Systems as Elements of Crisis Resilience in Europe," IZA Research Reports 137, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nora Lustig & Valentina Martinez Pabon & Guido Neidhöfer & Mariano Tommasi, 2020. "Short and Long-Run Distributional Impacts of COVID-19 in Latin America," Working Papers 2013, Tulane University, Department of Economics.
    2. Campos, Luciano & Casas, Agustín, 2021. "Rara Avis: Latin American populism in the 21st century," European Journal of Political Economy, Elsevier, vol. 70(C).
    3. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World," Working Papers 1612, Tulane University, Department of Economics, revised Aug 2017.
    4. Dora Benedek & Ruud A. Mooij & Michael Keen & Philippe Wingender, 2020. "Varieties of VAT pass through," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 890-930, August.
    5. Lustig Nora, 2016. "Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa," Journal of Globalization and Development, De Gruyter, vol. 7(1), pages 17-60, June.
    6. Cabrera, Maynor & Lustig, Nora & Morán, Hilcías E., 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala," World Development, Elsevier, vol. 76(C), pages 263-279.
    7. Miežienė Rasa & Krutulienė Sandra, 2019. "The Impact of Social Transfers on Poverty Reduction in EU Countries," TalTech Journal of European Studies, Sciendo, vol. 9(1), pages 157-175, June.
    8. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World," Commitment to Equity (CEQ) Working Paper Series 1323, Tulane University, Department of Economics.
    9. Nora Lustig, 2016. "Fiscal policy, inequality, and the poor in the developing world," WIDER Working Paper Series 164a, World Institute for Development Economic Research (UNU-WIDER).
    10. Ravallion, Martin & Chen, Shaohua, 2015. "Benefit incidence with incentive effects, measurement errors and latent heterogeneity: A case study for China," Journal of Public Economics, Elsevier, vol. 128(C), pages 124-132.
    11. Yixia Cai & Martin Evans, 2018. "Informal Transfers in Comparisons of Income Distributions: Lessons from Rich and Middle-Income Countries," Journal of Income Distribution, Ad libros publications inc., vol. 26(2), pages 1-20, July.
    12. Carlos Farinha Rodrigues & Isabel Andrade, 2014. "Robin Hood versus Piggy Bank: Income Redistribution in Portugal 2006-2010," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(5), pages 617-630, October.
    13. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152.
    14. Linda Irene Llamas Rembao & Luis Huesca Reynoso & José Javier González, 2019. "Impact of Income Taxes on Wages. A Non Parametric Analysis of the Mexican Case," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(1), pages 79-94, Enero-Mar.
    15. Luis Huesca & Linda Llamas, 2016. "Testing for Pro-Poorness of Growth through the Tax System: The Mexican Case," Journal of Reviews on Global Economics, Lifescience Global, vol. 5, pages 101-115.
    16. Nora Lustig, 2015. "Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa," Commitment to Equity (CEQ) Working Paper Series 1331, Tulane University, Department of Economics.
    17. Abdelkrim Araar & Luis Huesca, 2014. "Comparison of the Tax System Progressivity Over Time: Theory and Application with Mexican Data," Cahiers de recherche 1419, CIRPEE.
    18. Nora Lustig, 2016. "Fiscal policy, inequality, and the poor in the developing world," WIDER Working Paper Series 164b (Revised version May, World Institute for Development Economic Research (UNU-WIDER).
    19. Luis Huesca Reynoso & Abdelkrim Araar, 2016. "Comparison of fiscal system progressivity over time: theory and application in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 31(1), pages 3-45.
    20. Bird, Richard M. & Zolt, Eric M., 2015. "Fiscal Contracting in Latin America," World Development, Elsevier, vol. 67(C), pages 323-335.

    More about this item

    Keywords

    fiscal incidence; inequality; poverty; social spending; COVID; Spain;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipf:psejou:v:45:y:2021:i:4:p:517-541. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martina Fabris (email available below). General contact details of provider: https://edirc.repec.org/data/ijfffhr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.