Monetary compensation schemes during the COVID-19 pandemic: Implications for household incomes, liquidity constraints and consumption across the EU

Arbeitspapier

This paper analyses the effect of the COVID-19 pandemic on household disposable income and household demand in the European Union (EU), making use of the EU microsimulation model EUROMOD and nowcasting techniques. We show evidence of heterogeneity in the impact of the COVID-19 pandemic on the labour markets in EU Member States, with some countries hit substantially harder than others. Most EU Member States experience a large drop in market incomes in 2020, with poorer households hit the hardest. Tax-benefit systems cushioned significantly the transmission of the shock to the disposable income and the household demand, with monetary compensation schemes playing a major role. Additionally, we show that monetary compensation schemes prevent a significant share of households from becoming liquidity constrained during the pandemic.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: JRC Working Papers on Taxation and Structural Reforms ; No. 03/2022

Classification and Topics

• Classification: Wirtschaft
• Subject: COVID-19 ; Inequality ; Microsimulation ; EUROMOD

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Christl, Michael ; De Poli, Silvia ; Figari, Francesco ; Hufkens, Tina ; Leventi, Chrysa ; Papini, Andrea ; Tumino, Alberto
• Event: Veröffentlichung
• (who): European Commission, Joint Research Centre (JRC)
• (where): Seville
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/280862
• Last update: 10.03.2025, 11:42 AM CET