How Effective were Job-Retention Schemes during the COVID-19 Pandemic? A Microsimulation Approach for European Countries / W. Raphael Lam, Alexandra Solovyeva.

Format:

Book

Government document

Author/Creator:

Raphael Lam, W.

Contributor:

Solovyeva, Alexandra.

Series:

IMF Working Papers; Working Paper ; No. 2023/003

IMF Working Papers

Language:

English

Physical Description:

1 online resource (24 pages)

Other Title:

How Effective were Job-Retention Schemes during the COVID-19 Pandemic?

Place of Publication:

Washington, D.C. : International Monetary Fund, 2023.

Summary:

The COVID-19 pandemic had posed a dramatic impact on labor markets across Europe. Forceful fiscal responses have prevented an otherwise sharper contraction. Many countries introduced or expanded job-retention schemes to preserve jobs and support households. This paper uses a microsimulation approach (EUROMOD) and household data to assess the effectiveness of those schemes in stabilizing household income during the pandemic across European countries. Empirical evidence shows that job-retention schemes were effective in stabilizing income and, along with other measures, absorbed nearly 80 percent of market income shocks—almost doubling the extent of the automatic stabilization of the pre-pandemic tax and benefit systems. The large effects are related to the widespread use and scaling up of those schemes and a deep but short-lived disruption to labor markets during the pandemic. Along with other fiscal support measures, job-retention schemes helped mitigate the rise in the unemployment rate, by about 3 percentage points, and income inequality during the pandemic. Our results show that job-retention schemes were largely targeted, in which households more vulnerable to income losses, such as lower-income families, youth, and low-skilled workers, are able to stabilize their income.

Notes:

Description based on print version record.

ISBN:

9798400231377