Income Declines during COVID-19
- (pp. 340-44)
Abstract
The COVID-19 recession caused regressive market income changes in the United States, with large losses more frequent than during the Great Recession and more concentrated at the bottom of the distribution. Progressive taxes and transfers, especially from expanded unemployment insurance benefits and stimulus checks, dramatically offset these declines. We use administrative tax data to show that public policies made large annual tax-unit level income declines in 2020 less common than during the Great Recession, as well as 2019, an expansionary year. These policies stabilized incomes over the entire distribution, but this effect was strongest among those starting with low incomes.Citation
Larrimore, Jeff, Jacob Mortenson, and David Splinter. 2022. "Income Declines during COVID-19." AEA Papers and Proceedings, 112: 340-44. DOI: 10.1257/pandp.20221042Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- E32 Business Fluctuations; Cycles
- E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- I12 Health Behavior
- J65 Unemployment Insurance; Severance Pay; Plant Closings