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COVID-19 labour market shocks and their inequality implications for financial wellbeing

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  • Botha, Ferdi
  • de New, John P.
  • de New, Sonja C.
  • Ribar, David C.
  • Salamanca, Nicolás

Abstract

Using an online survey of Australian residents, we elicit the potential impacts of COVID-19 related labour market shocks on a validated measure of financial wellbeing. Experiencing a reduction in hours and earnings, entering into unemployment or having to file for unemployment benefits during the pandemic are strongly and significantly associated with decreases in financial wellbeing of 29% or 18 points on the financial wellbeing scale of 0-100, despite various government measures to reduce such effects. Unconditional quantile regression analyses indicate that the negative COVID-19 labour market effects are felt the most by people in the lowest percentiles of the financial wellbeing distribution. Counterfactual distribution regressions indicate a shifting of the financial wellbeing distribution leftwards brought on by those suffering any of the above-mentioned labour market shocks, indicating potential significant increases in financial wellbeing disadvantage and inequality.

Suggested Citation

  • Botha, Ferdi & de New, John P. & de New, Sonja C. & Ribar, David C. & Salamanca, Nicolás, 2020. "COVID-19 labour market shocks and their inequality implications for financial wellbeing," GLO Discussion Paper Series 661, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:661
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    More about this item

    Keywords

    Financial wellbeing; COVID-19; unemployment; earnings reduction; inequality;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D39 - Microeconomics - - Distribution - - - Other
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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