Income and Poverty in the Covid-19 Pandemic

65 Pages Posted: 25 Aug 2020 Last revised: 19 Nov 2021

See all articles by Jeehoon Han

Jeehoon Han

Zhejiang University

Bruce Meyer

University of Chicago

James X. Sullivan

University of Notre Dame - Department of Economics and Econometrics

Date Written: August 2020

Abstract

This paper addresses the economic impact of the COVID-19 pandemic by providing timely and accurate information on the impact of the current pandemic on income and poverty to inform the targeting of resources to those most affected and assess the success of current efforts. We construct new measures of the income distribution and poverty with a lag of only a few weeks using high frequency data from the Basic Monthly Current Population Survey (CPS), which collects income information for a large, representative sample of U.S. families. Because the family income data for this project are rarely used, we validate this timely measure of income by comparing historical estimates that rely on these data to estimates from data on income and consumption that have been used much more broadly. Our results indicate that at the start of the pandemic, government policy effectively countered its effects on incomes, leading poverty to fall and low percentiles of income to rise across a range of demographic groups and geographies. Simulations that rely on the detailed CPS data and that closely match total government payments made show that the entire decline in poverty that we find can be accounted for by the rise in government assistance, including unemployment insurance benefits and the Economic Impact Payments. Our simulations further indicate that of those losing employment the vast majority received unemployment insurance, though this was less true early on in the pandemic and receipt was uneven across the states, with some states not reaching a large share of their out of work residents.Updated information on the summary measures presented in this paper, using the latest data available, may be found at povertymeasurement.org.

Suggested Citation

Han, Jeehoon and Meyer, Bruce and Sullivan, James X., Income and Poverty in the Covid-19 Pandemic (August 2020). Available at SSRN: https://ssrn.com/abstract=3679722

Jeehoon Han (Contact Author)

Zhejiang University ( email )

Yuhangtang Road No.866
Hangzhou, Zhejiang 310058
China

Bruce Meyer

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

James X. Sullivan

University of Notre Dame - Department of Economics and Econometrics ( email )

Notre Dame, IN 46556
United States

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