IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_606_21.html
   My bibliography  Save this paper

The impact of the COVID-19 shock on labour income inequality: evidence from Italy

Author

Listed:
  • Francesca Carta

    (Bank of Italy)

  • Marta De Philippis

    (Bank of Italy)

Abstract

The spread of the pandemic and the consequent adoption of lockdown measures to prevent infections had severe consequences for business activity and employment. By using data from the Italian Labour Force Survey, this paper simulates the effect of the COVID-19 crisis on the dynamics and distribution of equivalized labour income in the first two quarters of 2020. Moreover, it assesses the effectiveness in smoothing labour income losses of the social insurance benefits that were in place before the crisis and of the temporary measures adopted by the Italian Government to face it. We find that the economic repercussions of the COVID-19 shock impacted low-income households more heavily than higher income families, implying a substantial increase in labour income inequality. However, our results show that the social insurance benefits temporarily introduced by the Italian Government were able, at least in the short term, to compensate for these income losses and for the increased inequality significantly more than the pre-crisis measures.

Suggested Citation

  • Francesca Carta & Marta De Philippis, 2021. "The impact of the COVID-19 shock on labour income inequality: evidence from Italy," Questioni di Economia e Finanza (Occasional Papers) 606, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_606_21
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2021-0606/QEF_606_21.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Boeri, Tito & Basso, Gaetano & Caiumi, Alessandro & Paccagnella, Marco, 2020. "The new hazardous jobs and worker reallocation," CEPR Discussion Papers 15100, C.E.P.R. Discussion Papers.
    2. Oriol Aspachs & Ruben Durante & Alberto Graziano & Josep Mestres & José Garcia Montalvo & Marta Reynal-Querol, 2020. "Real-Time inequality and the welfare state in motion: Evidence from COVID-19 in Spain," Economics Working Papers 1741, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Michael W. L. Elsby & Bart Hobijn & Aysegul Sahin, 2010. "The Labor Market in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 1-69.
    4. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    5. Luca Bonacini & Giovanni Gallo & Sergio Scicchitano, 2021. "Working from home and income inequality: risks of a ‘new normal’ with COVID-19," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(1), pages 303-360, January.
    6. Pierre Cahuc & Francis Kramarz & Sandra Nevoux, 2018. "When Short-Time Work Works," SciencePo Working papers hal-03393127, HAL.
    7. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    8. Christopher Boone & Arindrajit Dube & Lucas Goodman & Ethan Kaplan, 2021. "Unemployment Insurance Generosity and Aggregate Employment," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 58-99, May.
    9. repec:hal:spmain:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73 is not listed on IDEAS
    10. repec:hal:wpspec:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73 is not listed on IDEAS
    11. Aspachs, Oriol & Durante, Ruben & Graziano, Alberto & Mestres, Josep & García-Montalvo, José & Reynal-Querol, Marta, 2022. "Real-Time Inequality and the Welfare State in Motion: Evidence from COVID-19 in Spain," CEPR Discussion Papers 15118, C.E.P.R. Discussion Papers.
    12. Oriol Aspachs & Ruben Durante & Alberto Graziano & Josep Mestres & José García-Montalvo & Marta Reynal-Querol, 2020. "Real-Time Inequality and the Welfare State in Motion: Evidence from COVID-19 in Spain," Working Papers 1202, Barcelona School of Economics.
    13. Caitlin S. Brown & Martin Ravallion, 2020. "Inequality and the Coronavirus: Socioeconomic Covariates of Behavioral Responses and Viral Outcomes Across US Counties," NBER Working Papers 27549, National Bureau of Economic Research, Inc.
    14. Frederic Boissay & Phurichai Rungcharoenkitkul, 2020. "Macroeconomic effects of Covid-19: an early review," BIS Bulletins 7, Bank for International Settlements.
    15. Oriol Aspachs & Ruben Durante & Alberto Graziano & Josep Mestres & José Garcia Montalvo & Marta Reynal-Querol, 2020. "Real-time inequality and the welfare state in motion: Evidence from COVID-19 in Spain," Economics Working Papers 1734, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Francesca Carta, 2020. "Timely Indicators for Inequality and Poverty Using the Italian Labour Force Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 41-65, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ainaa, Carmen & Brunetti, Irene & Mussida, Chiara & Scicchitano, Sergio, 2021. "Who lost the most? Distributive effects of COVID-19 pandemic," GLO Discussion Paper Series 829, Global Labor Organization (GLO).
    2. Stefanie Stantcheva, 2022. "Inequalities in the times of a pandemic," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(109), pages 5-41.
    3. Carmen Aina & Irene Brunetti & Chiara Mussida & Sergio Scicchitano, 2023. "Distributional effects of COVID-19," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 221-256, March.
    4. Stefan Pollinger, 2023. "Optimal Contact Tracing and Social Distancing Policies to Suppress A New Infectious Disease," The Economic Journal, Royal Economic Society, vol. 133(654), pages 2483-2503.
    5. Juan Laborda & Pilar Rivera-Torres & Vicente Salas-Fumas & Cristina Suárez, 2021. "Is there life beyond the Spanish government’s aid to furloughed employees by COVID-19?," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-21, June.
    6. Monica Martinez-Bravo & Carlos Sanz, 2021. "Inequality and psychological well-being in times of COVID-19: evidence from Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(4), pages 489-548, December.
    7. Kosteas, Vasilios D. & Renna, Francesco & Scicchitano, Sergio, 2022. "Covid-19 and Working from Home: toward a "new normal"?," GLO Discussion Paper Series 1013, Global Labor Organization (GLO).
    8. Davide Furceri & Prakash Loungani & Jonathan D. Ostry & Pietro Pizzuto, 2022. "Will COVID-19 Have Long-Lasting Effects on Inequality? Evidence from Past Pandemics," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 811-839, December.
    9. Mr. Andrew Berg & Lahcen Bounader & Nikolay Gueorguiev & Hiroaki Miyamoto & Mr. Kenji Moriyama & Ryota Nakatani & Luis-Felipe Zanna, 2021. "For the Benefit of All: Fiscal Policies and Equity-Efficiency Trade-offs in the Age of Automation," IMF Working Papers 2021/187, International Monetary Fund.
    10. José Garcia Montalvo & Marta Reynal-Querol, 2020. "Distributional effects of COVID-19 on spending: A first look at the evidence from Spain," Economics Working Papers 1740, Department of Economics and Business, Universitat Pompeu Fabra.
    11. Oriol Aspachs & Ruben Durante & Alberto Graziano & Josep Mestres & Marta Reynal-Querol & Jose G Montalvo, 2021. "Tracking the impact of COVID-19 on economic inequality at high frequency," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-14, March.
    12. Dang, Hai-Anh H. & Nguyen, Cuong Viet & Carletto, Calogero, 2023. "Did a successful fight against COVID-19 come at a cost? Impacts of the pandemic on employment outcomes in Vietnam," World Development, Elsevier, vol. 161(C).
    13. Davide Furceri & Prakash Loungani & Jonathan D Ostry & Pietro Pizzuto, 2021. "The rise in inequality after pandemics: can fiscal support play a mitigating role? [Epidemics, inequality, and poverty in preindustrial and early industrial time]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(2), pages 445-457.
    14. Schettino, Francesco & Scicchitano, Sergio & Suppa, Domenico, 2024. "COVID 19 and Wage Polarization: A task based approach," GLO Discussion Paper Series 1398, Global Labor Organization (GLO).
    15. Phurichai Rungcharoenkitkul, 2021. "Macroeconomic effects of COVID‐19: A mid‐term review," Pacific Economic Review, Wiley Blackwell, vol. 26(4), pages 439-458, October.
    16. Basso, Gaetano & Boeri, Tito & Caiumi, Alessandro & Paccagnella, Marco, 2020. "The New Hazardous Jobs and Worker Reallocation," IZA Discussion Papers 13532, Institute of Labor Economics (IZA).
    17. Carlos Díaz & Sebastian Fossati & Nicolás Trajtenberg, 2022. "Stay at home if you can: COVID‐19 stay‐at‐home guidelines and local crime," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 19(4), pages 1067-1113, December.
    18. Nicholas W. Papageorge & Matthew V. Zahn & Michèle Belot & Eline Broek-Altenburg & Syngjoo Choi & Julian C. Jamison & Egon Tripodi, 2021. "Socio-demographic factors associated with self-protecting behavior during the Covid-19 pandemic," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(2), pages 691-738, April.
    19. Brandily, Paul & Brébion, Clément & Briole, Simon & Khoury, Laura, 2021. "A poorly understood disease? The impact of COVID-19 on the income gradient in mortality over the course of the pandemic," European Economic Review, Elsevier, vol. 140(C).
    20. Florio, Erminia & Kharazi, Aicha, 2022. "Curtailment of Economic Activity and Labor Inequalities," GLO Discussion Paper Series 1166, Global Labor Organization (GLO).

    More about this item

    Keywords

    labour market; inequality; social insurance benefits; recessions; coronavirus; Covid-19;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_606_21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.