TY - JOUR
T1 - Distributional impacts of the Covid-19 pandemic and the CARES Act
AU - Cortes, Guido Matias
AU - Forsythe, Eliza
N1 - This research has been supported by the Social Sciences and Humanities Research Council of Canada. Anahid Bauer provided excellent research assistance. We thank Gary Burtless, as well as various seminar and conference participants, for very valuable comments and suggestions.
PY - 2023/6
Y1 - 2023/6
N2 - Using data from the Current Population Survey, we investigate the distributional consequences of the Covid-19 pandemic and the associated public policy response on labor earnings and unemployment benefits in the United States up until February 2021. We find that year-on-year changes in labor earnings for employed individuals were not atypical during the pandemic months, regardless of their initial position in the earnings distribution. The incidence of job loss, however, was substantially higher among low earners, leading to a dramatic increase in labor income inequality among the set of individuals who were employed prior to the onset of the pandemic. By providing very high replacement rates for individuals displaced from low-paying jobs, the initial public policy response was successful in reversing the regressive nature of the pandemic’s impacts. We estimate, however, that recipiency rates for displaced low earners were lower than for higher earners. Moreover, from September 2020 onwards, when policy changes led to a decline in benefit levels, earnings changes became less progressive.
AB - Using data from the Current Population Survey, we investigate the distributional consequences of the Covid-19 pandemic and the associated public policy response on labor earnings and unemployment benefits in the United States up until February 2021. We find that year-on-year changes in labor earnings for employed individuals were not atypical during the pandemic months, regardless of their initial position in the earnings distribution. The incidence of job loss, however, was substantially higher among low earners, leading to a dramatic increase in labor income inequality among the set of individuals who were employed prior to the onset of the pandemic. By providing very high replacement rates for individuals displaced from low-paying jobs, the initial public policy response was successful in reversing the regressive nature of the pandemic’s impacts. We estimate, however, that recipiency rates for displaced low earners were lower than for higher earners. Moreover, from September 2020 onwards, when policy changes led to a decline in benefit levels, earnings changes became less progressive.
KW - Covid-19
KW - Inequality
KW - Public policy
KW - Redistribution
UR - http://www.scopus.com/inward/record.url?scp=85153358325&partnerID=8YFLogxK
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U2 - 10.1007/s10888-022-09552-8
DO - 10.1007/s10888-022-09552-8
M3 - Article
C2 - 37360568
AN - SCOPUS:85153358325
SN - 1569-1721
VL - 21
SP - 325
EP - 349
JO - Journal of Economic Inequality
JF - Journal of Economic Inequality
IS - 2
ER -