IDEAS home Printed from https://ideas.repec.org/p/hdl/wpaper/2103.html
   My bibliography  Save this paper

Lockdown, Earnings Losses and Household Asset Buffers in Europe

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://medialibrary.uantwerpen.be/files/57001/59c511f6-ad15-4d66-8c6b-b68949671c0d.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pouliakas, Konstantinos & Branka, Jiri, 2020. "EU Jobs at Highest Risk of COVID-19 Social Distancing: Will the Pandemic Exacerbate Labour Market Divide?," IZA Discussion Papers 13281, Institute of Labor Economics (IZA).
    2. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    3. Palomino, Juan C. & Rodríguez, Juan G. & Sebastian, Raquel, 2020. "Wage inequality and poverty effects of lockdown and social distancing in Europe," European Economic Review, Elsevier, vol. 129(C).
    4. Nezih Guner & Remzi Kaygusuz & Gustavo Ventura, 2014. "Income Taxation of U.S. Households: Facts and Parametric Estimates," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 559-581, October.
    5. Cathal O'Donoghue & Denisa M. Sologon & Iryna Kyzyma & John McHale, 2020. "Modelling the Distributional Impact of the COVID‐19 Crisis," Fiscal Studies, John Wiley & Sons, vol. 41(2), pages 321-336, June.
    6. Sebastian Doerr & Leonardo Gambacorta, 2020. "Covid-19 and regional employment in Europe," BIS Bulletins 16, Bank for International Settlements.
    7. Vanda Almeida & Salvador Barrios & Michael Christl & Silvia Poli & Alberto Tumino & Wouter Wielen, 2021. "The impact of COVID-19 on households´ income in the EU," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 413-431, September.
    8. Conchita D’Ambrosio & Markus Jäntti & Anthony Lepinteur, 2020. "Money and Happiness: Income, Wealth and Subjective Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(1), pages 47-66, February.
    9. Keister,Lisa A., 2000. "Wealth in America," Cambridge Books, Cambridge University Press, number 9780521627511, September.
    10. Mike Brewer & Iva Valentinova Tasseva, 2021. "Did the UK policy response to Covid-19 protect household incomes?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 433-458, September.
    11. Mathä, Thomas Y. & Porpiglia, Alessandro & Ziegelmeyer, Michael, 2017. "Household wealth in the euro area: The importance of intergenerational transfers, homeownership and house price dynamics," Journal of Housing Economics, Elsevier, vol. 35(C), pages 1-12.
    12. Francisco Azpitarte, 2012. "Measuring Poverty Using Both Income And Wealth: A Cross‐Country Comparison Between The U.S. And Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(1), pages 24-50, March.
    13. Bruce Headey & Ruud Muffels & Mark Wooden, 2008. "Money Does not Buy Happiness: Or Does It? A Reassessment Based on the Combined Effects of Wealth, Income and Consumption," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 87(1), pages 65-82, May.
    14. Nezih Guner & Remzi Kaygusuz & Gustavo Ventura, 2014. "Income Taxation of U.S. Households: Facts and Parametric Estimates," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 559-581, October.
    15. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    16. Marta Fana & Songul Tolan & Sergio Torrejon Perez & Maria Cesira Urzi Brancati & Enrique Fernandez Macias, 2020. "The COVID confinement measures and EU labour markets," JRC Research Reports JRC120578, Joint Research Centre.
    17. Keister,Lisa A., 2000. "Wealth in America," Cambridge Books, Cambridge University Press, number 9780521621687, September.
    18. Maria Demertzis & Marta Domínguez-Jiménez & Annamaria Lusardi & Bruegel, 2020. "The financial fragility of European households in the time of COVID-19," Policy Contributions 37489, Bruegel.
    Full references (including those not matched with items on IDEAS)

    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. Vanda Almeida & Salvador Barrios & Michael Christl & Silvia Poli & Alberto Tumino & Wouter Wielen, 2021. "The impact of COVID-19 on households´ income in the EU," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 413-431, September.
    2. Stefanie Stantcheva, 2022. "Inequalities in the times of a pandemic," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(109), pages 5-41.
    3. Andrew E. Clark & Conchita D’Ambrosio & Anthony Lepinteur, 2021. "The fall in income inequality during COVID-19 in four European countries," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 489-507, September.
    4. Borja Gambau & Juan C. Palomino & Juan G. Rodríguez & Raquel Sebastian, 2022. "COVID-19 restrictions in the US: wage vulnerability by education, race and gender," Applied Economics, Taylor & Francis Journals, vol. 54(25), pages 2900-2915, May.
    5. Kerstin Bruckmeier & Andreas Peichl & Martin Popp & Jürgen Wiemers & Timo Wollmershäuser, 2021. "Distributional effects of macroeconomic shocks in real-time," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 459-487, September.
    6. 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.
    7. Marta Fana & Sergio Torrejón Pérez & Enrique Fernández-Macías, 2020. "Employment impact of Covid-19 crisis: from short term effects to long terms prospects," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(3), pages 391-410, September.
    8. Nicole Kapelle & Theresa Nutz & Daria Tisch & Manuel Schechtl & Philipp M. Lersch & Emanuela Struffolino, 2022. "My Wealth, (Y)Our Life Satisfaction? Sole and Joint Wealth Ownership and Life Satisfaction in Marriage," European Journal of Population, Springer;European Association for Population Studies, vol. 38(4), pages 811-834, October.
    9. Carlos Díaz & Sebastian Fossati & Nicolás Trajtenberg, 2022. "Stay at home if you can: COVID‐19 stay‐at‐home guidelines and local crime," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 19(4), pages 1067-1113, December.
    10. Giovanni Gallo & Silvia Granato & michele Raitano, 2022. "Heterogeneous effects of the Covid-19 crisis on Italian workers’ incomes: the role played by jobs routinization and teleworkability," Center for the Analysis of Public Policies (CAPP) 0180, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    11. Benedetti, Ilaria & Crescenzi, Federico, 2023. "The role of income poverty and inequality indicators at regional level: An evaluation for Italy and Germany," Socio-Economic Planning Sciences, Elsevier, vol. 87(PA).
    12. Michael Christl & Silvia De Poli & Dénes Kucsera & Hanno Lorenz, 2022. "COVID-19 and (gender) inequality in income: the impact of discretionary policy measures in Austria," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-17, December.
    13. Carmen Aina & Irene Brunetti & Chiara Mussida & Sergio Scicchitano, 2023. "Distributional effects of COVID-19," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 221-256, March.
    14. Hans A. Holter & Dirk Krueger & Serhiy Stepanchuk, 2019. "How do tax progressivity and household heterogeneity affect Laffer curves?," Quantitative Economics, Econometric Society, vol. 10(4), pages 1317-1356, November.
    15. Musab Kurnaz & Mehmet Soytas, 2019. "Early Childhood Investment and Income Taxation," 2019 Meeting Papers 290, Society for Economic Dynamics.
    16. Buhmann, Mara & Pohlan, Laura & Roth, Duncan H.W., 2024. "Economic Shocks and Worker Careers: Has the COVID-19 Pandemic Affected Transitions Out of Unemployment?," IZA Discussion Papers 17268, Institute of Labor Economics (IZA).
    17. Findeisen, Sebastian & Sachs, Dominik, 2017. "Redistribution and insurance with simple tax instruments," Journal of Public Economics, Elsevier, vol. 146(C), pages 58-78.
    18. Stephie Fried & Kevin Novan & William B. Peterman, 2021. "Recycling Carbon Tax Revenue to Maximize Welfare," Finance and Economics Discussion Series 2021-023, Board of Governors of the Federal Reserve System (U.S.).
    19. Pedro R. D. Bom & Aitor Goti, 2018. "Public Capital and the Labor Income Share," Sustainability, MDPI, vol. 10(11), pages 1-17, October.
    20. Sebastian Koehne & Nicola Pavoni & Arpad Abraham, 2011. "Optimal Income Taxation with Asset Accumulation," 2011 Meeting Papers 1161, Society for Economic Dynamics.

    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

    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:hdl:wpaper:2103. 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: Santiago Burone (email available below). General contact details of provider: https://edirc.repec.org/data/csbuabe.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.