Discussion Paper Details

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Title: The Distributional Impact of the Pandemic

Author(s): Sinem Hacioglu, Diego R Kšnzig and Paolo Surico

Publication Date: July 2020

Keyword(s): benefits, Earnings, Heterogeneity, Income, Pandemic and spending

Programme Area(s): Monetary Economics and Fluctuations

Abstract: The top quartile of the income distribution accounts for almost half of the pandemic-related decline in aggregate consumption, with expenditure for this group falling much more than income. In contrast, the bottom quartile of the income distribution has seen the smallest spending cuts and the largest earnings drop but their total incomes have fallen by much less because of the increase in government benefits. The decline in consumers' spending preceded the introduction of the lockdown, whose partial lifting has triggered a stronger recovery in sectors with a lower contract rate. The largest spending contractions are concentrated in the most affluent regions. These conclusions are based on detailed high-frequency transaction data on spending, earnings and income from a large Fintech company in the United Kingdom.

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Bibliographic Reference

Hacioglu, S, Kšnzig, D and Surico, P. 2020. 'The Distributional Impact of the Pandemic'. London, Centre for Economic Policy Research.