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Cited by 65Income, Poverty, and InequalityCOVID-19 Pandemic ImpactsFinancial Literacy, Pension, Retirement Analysis

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Living with Reduced Income: An Analysis of Household Financial Vulnerability Under COVID-19

Open access
Midões, Catarina, Seré, Mateo·2022·Social Indicators Research
DOI 10.1007/s11205-021-02811-7PMC PMC8500469
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Abstract

The COVID-19 crisis has led to substantial reductions in earnings. We propose a new measure of financial vulnerability, computable through survey data, to determine whether households can withstand a certain income shock for a defined period of time. Using data from the ECB Household Finance and Consumption Survey (HFCS) we analyse financial vulnerability in seven EU countries. We find that, out of the 243 million individuals considered, 47 million are vulnerable to a three month long income shock (the average length of the first wave COVID-19 lockdown), i.e., they cannot afford food and housing expenses for three months without privately earned income. Differences across countries are stark. Individuals born outside the EU are especially likely to be vulnerable. Being younger, a single parent, and a woman are also statistically significant risk factors. Through a tax-benefit microsimulation exercise, we look into the COVID-19 employment protection benefits, the largest income support measure in the countries considered. Considering as our sample individuals in households where someone receives a salary, we derive household net income when employees are laid-off and awarded the COVID-19 employment protection benefits enacted. Our findings suggest that the employment protection schemes are extremely effective in reducing the number of vulnerable individuals. The relative importance of rent and mortgage suspensions, (likewise, widespread COVID-19 policies), in alleviating vulnerability, is highly country dependent.

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Fig. 1 Percentage of vulnerable individuals in a three months horizon, considering food and utilities, resorting to deposits and different sources of income
Fig. 1 Percentage of vulnerable individuals in a three months horizon, considering food and utilities, resorting to deposits and different sources of incomeCC BY · PubMed Central
Fig. 2 Percentage of vulnerable individuals in a three months horizon when rent and mortgages are added to food and utilities
Fig. 2 Percentage of vulnerable individuals in a three months horizon when rent and mortgages are added to food and utilitiesCC BY · PubMed Central
Fig. 3 Average household disposable income for households earning salary income, before COVID-19, and with COVID-19 layoff but no other salary income (in €)
Fig. 3 Average household disposable income for households earning salary income, before COVID-19, and with COVID-19 layoff but no other salary income (in €)CC BY · PubMed Central
Fig. 4 Percentage of vulnerable individuals with and without COVID-19 layoff, in a three months horizon, considering food and utilities
Fig. 4 Percentage of vulnerable individuals with and without COVID-19 layoff, in a three months horizon, considering food and utilitiesCC BY · PubMed Central
Fig. 5 Percentage of vulnerable individuals with and without COVID-19 layoff, in a three months horizon, considering food and utilities and rent and mortgages on the main residence
Fig. 5 Percentage of vulnerable individuals with and without COVID-19 layoff, in a three months horizon, considering food and utilities and rent and mortgages on the main residenceCC BY · PubMed Central
Fig. 6 Effect of mortgages and rent suspension
Fig. 6 Effect of mortgages and rent suspensionCC BY · PubMed Central
Fig. 7 Percentage of vulnerable individuals with the current COVID-19 layoff and with a replacement rate of 90% of salaries, in a three months horizon, considering food and utilities and housing expenses
Fig. 7 Percentage of vulnerable individuals with the current COVID-19 layoff and with a replacement rate of 90% of salaries, in a three months horizon, considering food and utilities and housing expensesCC BY · PubMed Central

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Research works printed but not linked: 29

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Cited by

Metadata

Authors
Midões, C., & Seré, M.
Affiliations
  • Ca' Foscari University of Venice (IT)
  • University of Antwerp (BE)
Corresponding author
Seré, Mateo
ORCID
Venue
Social Indicators Research
Publisher
Springer Science and Business Media LLC
Published
2021-10-08
Volume
161
Issue
1
Pages
125-149
ISSN
  • 0303-8300 (ISSN-L)
  • 1573-0921
DOI
10.1007/s11205-021-02811-7
PMC
PMC8500469
OpenAlex
W3205813136
Cited by
65
References
0
Citations by year
2026: 11 · 2025: 19 · 2024: 14 · 2023: 12 · 2022: 9
FWCI
12.13
Type
journal article
Language
en
Open access
Licence
Locations
  • Social Indicators Research (publishedVersion, cc-by)
  • PubMed Central (publishedVersion, cc-by)
  • PubMed (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
Universitat Pompeu Fabra
Topics
  • Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › COVID-19 Pandemic Impacts
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Literacy, Pension, Retirement Analysis
Keywords
household financial vulnerability, COVID-19 pandemic, income shocks, tax-benefit microsimulation, COVID-19 lockdown, EU member states, single-parent families, gender differences, employment protection

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