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Lockdown, Earnings Losses and Household Asset Buffers in Europe

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  • Sarah Kuypers
  • Ive Marx
  • Brian Nolan
  • Juan C. Palomino

Abstract

Measures taken to contain the spread of COVID-19 affect some workers’ capability to work and hence earnings more than others. The initial impact may be mitigated, for instance by relying on savings and assets. Access to these buffers may, however, also vary considerably within and across countries. In this paper we estimate for Euro Area workers their potential earnings losses related to the COVID-19 labour supply shock (before state responses) using the Lockdown Working Ability Index and relate this to households’ savings and assets observed in the Eurosystem Household Finance and Consumption Survey. We find that, on average across the Euro Area, affected households could only offset half of their losses by relying on their liquid assets, ranging from 25% in some countries to 80% in others. We also find that liquid asset buffers of households in the bottom earnings quintiles are often insufficient to prevent them from falling below a low earnings threshold.

Suggested Citation

  • Sarah Kuypers & Ive Marx & Brian Nolan & Juan C. Palomino, 2021. "Lockdown, Earnings Losses and Household Asset Buffers in Europe," Working Papers 2103, Herman Deleeck Centre for Social Policy, University of Antwerp.
    • Handle: RePEc:hdl:wpaper:2103
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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