Assessing the effectiveness of social protection measures in mitigating COVID 19 related income shocks in the European Union

Gasior, Katrin, Jara, H. Xavier ORCID: 0000-0001-6648-2653 and Makovec, Mattia (2024) Assessing the effectiveness of social protection measures in mitigating COVID 19 related income shocks in the European Union. Economic Analysis and Policy, 83. 583 - 605. ISSN 0313-5926

Text (Assessing the Effectiveness of Social Protection Measures in Mitigating COVID-19-Related Income Shocks in the European Union) - Accepted Version Repository staff only until 16 January 2026. Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (1MB)

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Abstract

By means of counterfactual simulation methods, this paper quantifies the role of tax–benefit policies in mitigating the shock of the COVID-19 pandemic to household income in the European Union. The tax-benefit microsimulation model for the European Union EUROMOD is used to decompose changes in the income distribution into the effects of: (i) earnings losses due to COVID-19, (ii) automatic stabilizers, (iii) monetary compensation schemes introduced during the pandemic; and (iv) COVID-19-specific reforms to taxes and benefits implemented by European Union governments. The results show a great deal of heterogeneity between countries in terms of earnings losses and the effect of tax-benefit policies during the COVID-19 pandemic. In most countries, the largest contribution to cushioning the economic shock of the pandemic comes from monetary compensation schemes. Automatic stabilizers also play a role, mainly through the effects of social insurance contributions, taxes, and unemployment insurance benefits. Tax-benefit systems cushioned incomes to a large extent even among those most severely affected by the shock to earnings, with an important role for monetary compensation schemes, but also a larger stabilizing effect of unemployment insurance. Among automatic stabilizers, social assistance benefits played an important role in cushioning the income shock for the poorest quintiles among the most severely affected, but only in selected countries.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/economic-ana...
Additional Information:	© 2024 Economic Society of Australia, Queensland
Divisions:	LSE International Inequalities Institute
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences H Social Sciences > HG Finance R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation) H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
Date Deposited:	08 Jul 2024 11:39
Last Modified:	20 Dec 2024 00:55
URI:	http://eprints.lse.ac.uk/id/eprint/124121

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