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The COVID-19 resilience of a continental welfare regime - nowcasting the distributional impact of the crisis.
Sologon, Denisa M; O'Donoghue, Cathal; Kyzyma, Iryna; Li, Jinjing; Linden, Jules; Wagener, Raymond.
  • Sologon DM; Luxembourg Institute of Socio-Economic Research (LISER), Esch-sur-Alzette, Luxembourg.
  • O'Donoghue C; National University of Ireland, Galway (NUIG), Galway, Ireland.
  • Kyzyma I; Luxembourg Institute of Socio-Economic Research (LISER), Esch-sur-Alzette, Luxembourg.
  • Li J; University of Canberra, Canberra, Australia.
  • Linden J; Luxembourg Institute of Socio-Economic Research (LISER), Esch-sur-Alzette, Luxembourg.
  • Wagener R; IGSS, Luxembourg, Luxembourg.
J Econ Inequal ; : 1-33, 2022 Feb 22.
Article in English | MEDLINE | ID: covidwho-1826687
ABSTRACT
We evaluate the COVID-19 resilience of a Continental welfare regime by nowcasting the implications of the shock and its associated policy responses on the distribution of household incomes over the whole of 2020. Our approach relies on a dynamic microsimulation modelling that combines a household income generation model estimated on the latest EU-SILC wave with novel nowcasting techniques to calibrate the simulations using external macro controls which reflect the macroeconomic climate during the crisis. We focus on Luxembourg, a country that introduced minor tweaks to the existing tax-benefit system, which has a strong social insurance focus that gave certainty during the crisis. We find the system was well-equipped ahead of the crisis to cushion household incomes against job losses. The income-support policy changes were effective in cushioning household incomes and mitigating an increase in income inequality, allowing average household disposable income and inequality levels to bounce back to pre-crisis levels in the last quarter of 2020. The share of labour incomes dropped, but was compensated by an increase in benefits, reflecting the cushioning effect of the transfer system. Overall market incomes dropped and became more unequal. Their disequalizing evolution was matched by an increase in redistribution, driven by an increase in the generosity of benefits and larger access to benefits. The nowcasting model is a "near" real-time analysis and decision support tool to monitor the recovery, scalable to other countries with high applicability for policymakers. SUPPLEMENTARY INFORMATION The online version contains supplementary material available at doi10.1007/s10888-021-09524-4.
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Full text: Available Collection: International databases Database: MEDLINE Type of study: Experimental Studies Language: English Journal: J Econ Inequal Year: 2022 Document Type: Article Affiliation country: S10888-021-09524-4

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Full text: Available Collection: International databases Database: MEDLINE Type of study: Experimental Studies Language: English Journal: J Econ Inequal Year: 2022 Document Type: Article Affiliation country: S10888-021-09524-4