The Distributional Impact of the Pandemic

52 Pages Posted: 28 Jul 2020 Last revised: 16 Aug 2020

See all articles by Sinem Hacioglu Hoke

Sinem Hacioglu Hoke

Bank of England

Diego R. Känzig

London Business School - Department of Economics

Paolo Surico

London Business School

Date Written: July 2020

Abstract

The top quartile of the income distribution accounts for almost half of the pandemic-related decline in aggregate consumption, with expenditure for this group falling much more than income. In contrast, the bottom quartile of the income distribution has seen the smallest spending cuts and the largest earnings drop but their total incomes have fallen by much less because of the increase in government benefits. The decline in consumers' spending preceded the introduction of the lockdown, whose partial lifting has triggered a stronger recovery in sectors with a lower contract rate. The largest spending contractions are concentrated in the most affluent regions. These conclusions are based on detailed high-frequency transaction data on spending, earnings and income from a large Fintech company in the United Kingdom.

Keywords: benefits, Earnings, Heterogeneity, Income, Pandemic, spending

JEL Classification: D12, E21, G51

Suggested Citation

Hacioglu Hoke, Sinem and Känzig, Diego R. and Surico, Paolo, The Distributional Impact of the Pandemic (July 2020). CEPR Discussion Paper No. DP15101, Available at SSRN: https://ssrn.com/abstract=3661445

Sinem Hacioglu Hoke (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Diego R. Känzig

London Business School - Department of Economics ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Paolo Surico

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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