A new GLO Discussion Paper indicates that the negative COVID-19 labour market effects are felt the most by people in the lowest percentiles of the financial wellbeing distribution suggesting significant increases in financial wellbeing disadvantage and inequality.

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GLO Discussion Paper No. 661, 2020

COVID-19 labour market shocks and their inequality implications for financial wellbeing – Download PDF
by Botha, Ferdi & de New, John P. & de New, Sonja C. & Ribar, David C. & Salamanca, Nicolá

GLO Fellows John P. de New & David C. Ribar

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Author Abstract: Using an online survey of Australian residents, we elicit the potential impacts of COVID-19 related labour market shocks on a validated measure of financial wellbeing. Experiencing a reduction in hours and earnings, entering into unemployment or having to file for unemployment benefits during the pandemic are strongly and significantly associated with decreases in financial wellbeing of 29% or 18 points on the financial wellbeing scale of 0-100, despite various government measures to reduce such effects. Unconditional quantile regression analyses indicate that the negative COVID-19 labour market effects are felt the most by people in the lowest percentiles of the financial wellbeing distribution. Counterfactual distribution regressions indicate a shifting of the financial wellbeing distribution leftwards brought on by those suffering any of the above-mentioned labour market shocks, indicating potential significant increases in financial wellbeing disadvantage and inequality.

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GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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