The Idiosyncratic Impact of an Aggregate Shock: The Distributional Consequences of COVID-19

40 Pages Posted: 2 Jun 2020

See all articles by Michaela Benzeval

Michaela Benzeval

University of Essex

Jonathan Burton

University of Essex

Thomas F. Crossley

European University Institute - Economics Department (ECO); Institute for Fiscal Studies

Paul Fisher

University of Essex

Annette Jäckle

University of Essex

Hamish Low

University of Oxford; Institute for Fiscal Studies (IFS)

Brendan Read

University of Essex

Date Written: May 31, 2020

Abstract

Using new data from the Understanding Society: COVID 19 survey collected in April 2020, we show how the aggregate shock caused by the pandemic affects individuals across the distribution. The survey collects data from existing members of the Understanding Society panel survey who have been followed for up to 10 years. Understanding society is based on probability samples and the Understanding Society Covid19 Survey is carefully constructed to support valid population inferences. Further the panel allows comparisons with a pre-pandemic baseline. We document how the shock of the pandemic translates into different economic shocks for different types of worker: those with less education and precarious employment face the biggest economic shocks. Some of those affected are able to mitigate the impact of the economic shocks: universal credit protects those in the bottom quintile, for example. We estimate the prevalence of the different measures individuals and households take to mitigate the shocks. We show that the opportunities for mitigation are most limited for those most in need.

Keywords: COVID-19, job loss, inequality, mitigation, financial distress

JEL Classification: C83, D31, G51, I31, J31, J63

Suggested Citation

Benzeval, Michaela and Burton, Jonathan and Crossley, Thomas F. and Fisher, Paul and Jäckle, Annette and Low, Hamish and Read, Brendan, The Idiosyncratic Impact of an Aggregate Shock: The Distributional Consequences of COVID-19 (May 31, 2020). Available at SSRN: https://ssrn.com/abstract=3615691 or http://dx.doi.org/10.2139/ssrn.3615691

Michaela Benzeval

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Jonathan Burton

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Thomas F. Crossley

European University Institute - Economics Department (ECO) ( email )

Villa San Paolo
Via della Piazzuola 43
50133 Florence
Italy

Institute for Fiscal Studies ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Paul Fisher (Contact Author)

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Annette Jäckle

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Hamish Low

University of Oxford ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Brendan Read

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

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