Income Loss and Financial Distress during COVID-19: The Protective Role of Liquid Assets

39 Pages Posted: 22 Nov 2020

See all articles by Stephen Roll

Stephen Roll

Washington University in St. Louis

Mathieu Despard

UNC Greensboro; Social Policy Institute

Date Written: November 19, 2020

Abstract

Nearly a quarter of U.S. households have experienced job or income losses related to the COVID-19 pandemic. Liquid assets mitigate financial distress in the face of financial shocks such as job loss, yet this relationship in the midst of the COVID-19 pandemic is unknown. Using a nationally representative sample of U.S. households (N = 4,383) who completed a survey in the early days of the pandemic, we examined pre-pandemic liquid assets as a moderator of the relationship between job and income loss and difficulty meeting financial obligations and use of high-cost financial resources. Estimates from propensity score-weighted linear probability models indicated that greater liquid assets lessened the probability of experiencing all eight measures of financial distress and most measures of distress among households experiencing job or income losses. Policy efforts to help households build emergency savings can help households better prepare for future pandemics while also supporting public health responses.

Keywords: liquid assets, COVID-19, income volatility, job loss, hardship, debt, alternative financial services

JEL Classification: D14, I31, D31

Suggested Citation

Roll, Stephen and Despard, Mathieu, Income Loss and Financial Distress during COVID-19: The Protective Role of Liquid Assets (November 19, 2020). Available at SSRN: https://ssrn.com/abstract=3733862 or http://dx.doi.org/10.2139/ssrn.3733862

Stephen Roll (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Mathieu Despard

UNC Greensboro ( email )

PO Box 26170
Greensboro, NC 27402
United States
9193587162 (Phone)

HOME PAGE: http://matdespard.wp.uncg.edu/

Social Policy Institute ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
125
Abstract Views
1,029
rank
275,710
PlumX Metrics