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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 Gómez Bengoechea

Abstract

I used household survey data to microsimulate the impact of the COVID-19 crisis on income distribution in Spain. I estimate the cost of potential lockdowns on income under three different protection scenarios: no minimum income state protection, 2020’s Ingreso Mínimo Vital (IMV) and the former Renta Mínima de Inserción (RMI). Results show that COVID crisis reduces income for the entire income distribution and, even in the context of a relatively efficient redistributive system, increases inequality and poverty at various levels. The IMV approach is the most efficient one in smoothing the impact of the COVID-19 crisis on income distribution. It may be necessary to rise taxes and to reduce other expenditure policies to maintain current protection in a context of lower public revenues.

Suggested Citation

  • 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.
    • Handle: RePEc:tul:ceqwps:102
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq102.pdf
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    References listed on IDEAS

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    1. Herwig Immervoll & Horacio Levy & Christine Lietz & Daniela Mantovani & Cathal O’Donoghue & Holly Sutherland & Gerlinde Verbist, 2006. "Household Incomes and Redistribution in the European Union: Quantifying the Equalizing Properties of Taxes and Benefits," Palgrave Macmillan Books, in: Dimitri B. Papadimitriou (ed.), The Distributional Effects of Government Spending and Taxation, chapter 5, pages 135-165, Palgrave Macmillan.
    2. François Bourguignon, 2011. "Status Quo In The Welfare Analysis Of Tax Reforms," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 603-621, December.
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    Cited by:

    1. 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.
    2. Ihsaan Bassier & Joshua Budlender & Maya Goldman, 2022. "Social distress and (some) relief: Estimating the impact of pandemic job loss on poverty in South Africa," WIDER Working Paper Series wp-2022-80, World Institute for Development Economic Research (UNU-WIDER).

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    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

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