Abstract
We use new, high-quality UK panel data to document the economic impacts of the COVID-19 pandemic at an individual level, from April 2020 to March 2021. We focus on where and to what extent pre-existing labour market and financial inequalities have been exacerbated. Our story is more nuanced than earlier papers focusing on the start of the pandemic. To March 2021 some inequalities worsened, but others did not, and in some cases, a widening of labour market inequalities in the first wave of the pandemic was subsequently reversed. We find no evidence of divergence in employment outcomes by gender. On the other hand, the first wave of the pandemic impacted the employment of ethnic minorities, the young, and those with less formal education, but these differential impacts had largely abated by March 2021. By various measures, financial position and living standards strengthened, not only for the affluent, but also for middle deciles of the long-run income distribution, although those at the very bottom of the income distribution were more likely to report a decline in net wealth over the course of the pandemic.
Highlights
At the same time, the savings rate peaked at over 29%. These apparently in-congruent aggregate patterns beg the question of what has transpired at the individual level and across the income distribution, and further how these patterns changed as the pandemic evolved
High-quality panel data to document the economic impacts of the pandemic at an individual level, and in particular where and to what extent pre-existing labour market and financial inequalities have been exacerbated
We focus on three main issues: the evolution of individual labour market experiences; saving, borrowing and changes in net wealth; and individuals’ subjective evaluations of their financial situation
Summary
In common with the rest of the world, the UK has been through an historical health shock with widespread economic implications. High-quality panel data to document the economic impacts of the pandemic at an individual level, and in particular where and to what extent pre-existing labour market and financial inequalities have been exacerbated. Individuals’ subjective evaluations of their situation evolved in much more positive ways than the labour market shocks would imply Inequality in this measure of financial security narrowed. The key contributions of this paper, are firstly that we are able to show the paths of labour markets and financial resilience as the pandemic evolved through 2020 and 2021, rather than just the initial impacts This matters because the consequences of the pandemic, for various inequalities, changed substantially over the year.
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