Patterns of household income dynamics in the EU through the Great Recession

About this event

To date, relatively little evidence is still available about the impact of the Great Recession (and its aftermath) on household incomes across EU countries. Immediate distributive impacts during GDP contraction years appear to be heterogeneous in size and direction. In this analysis, I exploit the most recent longitudinal component of the EU Statistics on Income and Living Conditions survey to explore household income dynamics during Great Recession years. I look at the distribution of year-on-year changes in household incomes between 2007 and 2010, focusing on the degree of progressivity (or pro-poorness) of these changes. Overall, household income variations appear to be more responsive to the macroeconomic shock than what aggregate statistics on changes in median income or Gini indices might have suggested. In many countries---especially recent EU accession countries---household incomes were hard hit between 2008 and 2009, yet total income variations remained generally `progressive'. Changes are largely driven by labour income variations with some buffering through compensating variations in taxes (and benefits, yet to a smaller extent). The work is largely in progress; I will describe the methodological apparatus, discuss caveats in the data, and show headline findings, but much remains to be done in identifying general patterns across countries and thinking of relevant `counterfactuals' as to what could have happened differently in different countries.