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

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  • 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.

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  • 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
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    1. Eichhorst, Werner & Krause-Pilatus, Annabelle & Dolls, Mathias & Lay, Max, 2024. "Crisis Resilience of European Welfare States: The Role of Multiple Layers of Protection," IZA Discussion Papers 17463, Institute of Labor Economics (IZA).
    2. 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).

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    Keywords

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    JEL classification:

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

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