Living with reduced income: an analysis of household financial vulnerability under COVID-19

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• dc.contributor.author Midões, Catarina
• dc.contributor.author Seré Quintero, Mateo
• dc.date.accessioned 2022-05-19T08:37:48Z
• dc.date.available 2022-05-19T08:37:48Z
• dc.date.issued 2022
• dc.description.abstract The COVID-19 crisis has led to substantial reductions in earnings. We propose a new measure of financial vulnerability, computable through survey data, to determine whether households can withstand a certain income shock for a defined period of time. Using data from the ECB Household Finance and Consumption Survey (HFCS) we analyse financial vulnerability in seven EU countries. We find that, out of the 243 million individuals considered, 47 million are vulnerable to a three month long income shock (the average length of the first wave COVID-19 lockdown), i.e., they cannot afford food and housing expenses for three months without privately earned income. Differences across countries are stark. Individuals born outside the EU are especially likely to be vulnerable. Being younger, a single parent, and a woman are also statistically significant risk factors. Through a tax-benefit microsimulation exercise, we look into the COVID-19 employment protection benefits, the largest income support measure in the countries considered. Considering as our sample individuals in households where someone receives a salary, we derive household net income when employees are laid-off and awarded the COVID-19 employment protection benefits enacted. Our findings suggest that the employment protection schemes are extremely effective in reducing the number of vulnerable individuals. The relative importance of rent and mortgage suspensions, (likewise, widespread COVID-19 policies), in alleviating vulnerability, is highly country dependent.
• dc.format.mimetype application/pdf
• dc.identifier.citation Midões C, Seré M. Living with reduced income: an analysis of household financial vulnerability under COVID-19. Social Indicators Research. 2022 May;161(1):125-49. DOI: 10.1007/s11205-021-02811-7
• dc.identifier.doi http://dx.doi.org/10.1007/s11205-021-02811-7
• dc.identifier.issn 0303-8300
• dc.identifier.uri http://hdl.handle.net/10230/53168
• dc.language.iso eng
• dc.publisher Springer
• dc.relation.ispartof Social Indicators Research. 2022 May;161(1):125-49
• dc.rights This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by/4.0/
• dc.subject.keyword Vulnerability
• dc.subject.keyword Household finance
• dc.subject.keyword Microsimulation
• dc.subject.keyword COVID-19
• dc.title Living with reduced income: an analysis of household financial vulnerability under COVID-19
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion