Abstract
Using a panel of tax data, we follow individuals’ earnings over business cycles. Compared to prior recessions, the Covid policy response and recovery were more progressive. Among workers starting in the bottom quintile, median real earnings including fiscal relief increased 66 percent in 2020—after the prior two recessions this measure decreased. This resulted from substantial Covid-era stimulus payments and unemployment insurance. With fiscal relief ending, bottom-quintile earnings in 2022 returned near pre-Covid levels. Among those starting in the top quintile, median real market earnings rose in 2020. Top-quintile earnings subsequently fell, although by less than around previous recessions.
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