Drop In Income Research Articles

Associations of serial negative income shock and all-cause mortality: a longitudinal study in China

IntroductionWith a precarious economic outlook and increasing income volatility in current times, understanding the association between negative income shock and health is crucial. However, few studies have examined such associations...

Unemployment, Financial Literacy, and Retirement: Evidence From National Data Before and During COVID-19 Pandemic

Unemployment rates changed dramatically and peaked at 14.7% in April 2020 in the United States. The labor market force might affect households’ retirement differently before and during the COVID-19 pandemic. By utilizing 2018 and 2021 datasets, the study mainly contributes to the following insights related to retirement decisions. First, the current study finds a positive correlation between state-level unemployment rates and retirement. Second, this study finds that both objective and subjective financial literacy, financial confidence, age, and households without a child or a financially dependent child are positively associated with retirement in both pre-pandemic and during the pandemic. Financial market participation, financial risk, and income drop are negatively associated with retirement in pre-pandemic and during the pandemic. We find different significant results regarding the annual income, savings, and the number of children in a household before and during the pandemic. The findings extend the literature on unemployment and retirement. Financial professionals and the government will apply the empirical findings to the practice.

It Takes a Village: Health and Old-Age Support in China.

How do older individuals cope with health impairments and the potential economic losses that ensue? Exploiting longitudinal data on a nationally representative sample of Chinese seniors, we investigate whether and how familial economic support responds to sudden and sizable changes in health. We find that both financial and instrumental support from children go up following a health shock. Furthermore, financial transfers coming from siblings, other relatives and friends increase by a larger percentage than those from children. We also find evidence that instrumental care received from a spouse responds strongly to health shocks. Finally, we find that although labor supply and earned income drop considerably, there is no significant change in non-health expenditure. Our results suggest that households are able to cope with some of the adverse economic impacts of health shocks by relying on support networks that extend beyond their children and grand-children. This is particularly relevant in the context of shrinking family sizes resulting from stringent family planning policies.

Assessing the role of tax‐benefit policies during the COVID‐19 pandemic: Evidence from the Andean region

AbstractThis paper aims to assess the role of tax‐benefit policies in mitigating the effects of COVID‐19 on the distribution of household disposable income in Colombia, Ecuador, and Peru. We exploit data from phone surveys collected during the pandemic combined with tax‐benefit microsimulation techniques to nowcast the distribution of household disposable income. Our results show a sharp drop in household disposable income and a dramatic increase in poverty and inequality during the second quarter of 2020. By the end of 2020, the economy recovers but poverty and inequality remain above the pre‐pandemic levels. COVID‐related policies cushion the effect of the crisis at the bottom of the distribution, and their effect on poverty and inequality largely depends on the generosity of the benefits implemented. By contrast, automatic stabilizers mitigate the impact of the income shock at the top of the distribution due to the effect of social insurance contributions and personal income tax, whereas social assistance programs in place before the pandemic fail to act as automatic stabilizers due to their design as proxy means‐tested benefits. We validate our nowcasting estimates with actual survey data from the end of 2020 and show that our results match closely poverty and inequality indicators in all three countries.

Covid-19 heterogeneous effects on Italian workers’ incomes: the role of jobs routinization and teleworkability

PurposeThe Covid-19 pandemic appears to have engendered heterogeneous effects on individuals’ labour market prospects. This paper focuses on two possible sources of a heterogeneous exposition to labour market risks associated with the pandemic outbreak: the routine task content of the job and the teleworkability. To evaluate whether these dimensions played a crucial role in amplifying employment and wage gaps among workers, we focus on the case of Italy, the first EU country hit by Covid-19.Design/methodology/approachInvestigating the actual effect of the pandemic on workers employed in jobs with a different degree of teleworkability and routinization, using real microdata, is currently unfeasible. This is because longitudinal datasets collecting annual earnings and the detailed information about occupations needed to capture a job’s routine task content and teleworkability are not presently available. To simulate changes in the wage distribution for the year 2020, we have employed a static microsimulation model. This model is built on data from the Statistics on Income and Living Conditions (IT-SILC) survey, which has been enriched with administrative data and aligned with monthly observed labour market dynamics by industries and regions.FindingsWe measure the degree of job teleworkability and routinization with the teleworkability index (TWA) built by Sostero et al. (2020) and the routine-task-intensity index (RTI) developed by Cirillo et al. (2021), respectively. We find that RTI and TWA are negatively and positively associated with wages, respectively, and they are correlated with higher (respectively lower) risks of a large labour income drop due to the pandemic. Our evidence suggests that labour market risks related to the pandemic – and the associated new types of earnings inequality that may derive – are shaped by various factors (including TWA and RTI) instead of by a single dimension. However, differences in income drop risks for workers in jobs with varying degrees of teleworkability and routinization largely reduce when income support measures are considered, thus suggesting that the redistributive effect of the emergency measures implemented by the Italian government was rather effective.Originality/valueNo studies have so far investigated the effect of the pandemic on workers employed in jobs with a different degree of routinization and teleworkability in Italy. We thus investigate whether income drop risks in Italy in 2020 – before and after income support measures – differed among workers whose jobs are characterized by a different degree of RTI and TWA.

Efeitos das Diferenças na Política Contábil de Leasings entre o FASB e o IASB

Objective: This research investigates the effects of the 2019 US lease standards for US lessee companies, comparing with the potential effects of IFRS 16 to explore the economic reasons that would have led the FASB and the IASB to diverge from their joint lease standard project. Method: We hand-collected detailed data on leases for 500 US lessees firms’ 2019 financial statements to first analyze Topic 842’s effects on financial ratios and to simulate these effects had the FASB adopted the same earnings recognition criteria in IFRS 16. Next, we investigate the value relevance of these observed and simulated effects on the stock market. Results: Topic 842 generated significant variations in companies' financial indicators, but it was not possible to identify the value relevance of these variations due to model limitations. The IFRS 16 simulation shows a significant increase in EBIT and operating cash flows, but a drop in net income, which seems to have been incorporated into stock prices. This suggests the FASB’s decision to diverge from the IASB could include the desire to avoid lower earnings and their negative impacts on the stock market. Contributions: This research adds to the literature first by focusing on the US when most of the recent studies investigated the IFRS world and, second, by exploring economic reasons rather than the hierarchy of power between the FASB and the IASB. Finally, we add a novelty derived from the detailed manual work which allowed us to estimate the effects had the US firms been under IASB’s jurisdiction.

Proceso evolutivo de una organización de huerteros en la provincia de Buenos Aires (Argentina): el caso de la Asociación Civil Los Cirujas de La Matanza

Due to the deepening of neoliberal policies in the 1990s, the labor market suffered changes that led to an increase in precariousness and unemployment, a drop in income, and an increase in poverty. In this context, the ProHuerta Program (Pro Vegetable Garden Program) was launched to facilitate access of the vulnerable population to a healthier and more diverse diet. In the district of La Matanza (province of Buenos Aires, Argentina), in 1996, some volunteer promoters of this program decided to create an association, the Cirujas Civil Association from La Matanza as an alternative organization, oriented to satisfy their needs and part of the Matanza community’s needs. The general objective of this study is to analyze the evolutionary process of this organizational experience as well as to understand its scope and contribution to community development. To this end, a case study was conducted following a qualitative approach.

Mortgage Status and Financial Stress: Do Home Equity Loans, Negative Home Equity, and Mortgage Default Matter?

A home is often the largest asset held by U.S. households. If home equity accumulation is slowed through acquiring a home equity loan, threatened through mortgage default, or undermined through the occurrence of negative home equity, homeowners may experience increased financial stress. This study used the 2018 National Financial Capability Study to assess the relationship between three mortgage statuses (having a home equity loan, negative home equity, or mortgage default) and financial stress among nonretiree mortgage holders (N= 5,058). Financial stress was measured by an index of financial difficulty perceptions. Findings revealed that negative home equity is related to greater levels of financial stress than mortgage default or having a home equity loan. Additionally, experiencing a large drop in income intensified the positive relationship between negative home equity and the financial stress index. These findings suggest that conditions seemingly outside the control of homeowners may influence their financial stress perceptions.

Political Conflicts and Global Political Problems as a Factor of Destabilization of Socio-Economic Development of Ukraine: The Role of Political Elites

The aim of the research is to analyze the impact of the Russian-Ukrainian war (political conflict) and global political problems on the socio-economic development of the state. The Russian-Ukrainian war leads to an economic crisis, a drop in incomes and welfare, and an increase in unemployment. In addition, environmental problems caused by war crimes lead to an increase in the number of diseases and slow down socio-economic development. The study was conducted in Ukraine from the start of a full-scale Russian invasion (February 2022) to April 2023. The following scientific approaches were used: political, conflict, and typological. As well as general scientific methods: analysis and synthesis, systematic method, induction and deduction, generalization. The results emphasize that one of the reasons for the Russian-Ukrainian war is the different political and socio-economic interests that lead to the war. This study's findings underscore the global ramifications of a full-scale conflict within Ukraine's borders. Moreover, it highlights the substantial impact of political conflicts and global political challenges as destabilizing factors, casting a detrimental influence on the socio-economic progress of the nation. The scientific novelty of the study consists in a comprehensive and systematic analysis of the impact of the Russian-Ukrainian war on the socio-economic development of Ukraine.

Visitor-centric marketing approach driving theme park customer patronage: unveiling the post COVID-19 pandemic perspective

The onset of Covid-19 pandemic has resulted in a drop in visitor ship and income causing many theme parks to fail in sustaining their business. In reciprocating to this pandemic, Malaysia's theme park industry, have become more innovative in adapting to this rapidly changing new norm. This research ascertained the influence of service quality, promotion and price on customer patronage of theme parks during Covid-19. Data were collected from 340 respondents. Convenience sampling technique was used to select the respondents and a close ended structured questionnaire with a 5-point Likert scale was used for data collection. Findings from this study revealed that pricing and service quality has a strong influence on theme park patronage. This calls for management of theme parks to innovate and redesign their service quality dimensions and conduct consistent training in theme park service quality delivery to familiarize service delivery employees of their roles in the service delivery process. Theme parks too should inject flexibility in their ticket pricing to make them affordable. Such visitor-centric marketing approach can drive customer satisfaction, create positive word-of-mouth among visitors to increase patronage to the theme park and eventually heighten profits.

ТРАНСФОРМАЦІЯ БІЗНЕС-МОДЕЛЕЙ ПІДПРИЄМСТВ В УМОВАХ ВІЙНИ

The purpose of the study is to determine the impact of changes in the micro and macro environment on business during a full-scale war and directions for modifying business models that ensure the survival and development of business structures. The methodological basis of the research is А. Osterwalder's and I. Pigneur’s approach to business modeling. In the study it was determined that the war caused the emergence of new consumer segments. There are displaced persons, the state or volunteers, consumers with specific needs due to the special circumstances created by the war. As a result of changes in the demographic, socio-economic characteristics of society, business must rethink the characteristics of existing market segments. The value proposition can be modified taking into account the growth of national self-awareness, an increase in psychological stress, and changes in consumer priorities in wartime conditions. Problems with the organization of physical movement of goods increase the relevance of e-commerce. There is a need to review the channels and quality of communications to attract consumers to form long-term relationships with them, because consumers are more particular about the content and timeliness of messages from sellers during a war. Review of key segments, value proposition prompts to make changes to the range of goods and services that ensure incomes, sales organization, payment methods. An increase in the cost of resources, primarily raw materials, direct loss of property, a decrease of availability of financial resources, and the loss of human capital during the war causes the need to review the priority of resources for the company, and the search for new ways of attracting them. Determination of key types of activities is carried out under the influence of adjustment of consumer segments and available resources. Since many businesses lose the ability to fulfill previously obligations, companies need to look for new key partners, and the increase in the price of resources and the drop in client incomes increases the urgency of cost optimization.

How are veterans faring financially? Updates and new evidence from a national survey

This research provides new and updated evidence on the financial capability of military veterans. We leverage data from two waves of the FINRA Investor Education Foundation’s National Financial Capability Study (NFCS) to examine how veterans are faring over time, relative to comparable civilians. Overall, veterans in 2018 fared better than non-veterans in several areas. They reported higher financial satisfaction, less difficulty covering expenses, and a higher likelihood of having an emergency fund and non-retirement investment account. However, veterans were more likely to report having experienced a large drop in income, problematic credit card behaviors and late mortgage payments. Notably, though several indicators of overall financial well-being and saving behaviors improved from 2015 to 2018 and spending and credit outcomes worsened, these relative changes did not differ between veterans and non-veterans.

Empirical Testing of Grossman’s the Demand for Health Model: The Case of Russia

Healthcare services constitute one of the most important markets as they are used by all people regardless of age, wealth, and worldview. In order to effectively manage both private and public healthcare systems and to expand the scope of services provided in a timely manner, it is necessary to understand the nature of the demand for health, depending on the development of society and individuals. This paper is devoted to the empirical testing of one of the most influential models of health economics – Michael Grossman’s model of health demand – by means of econometrical modelling. We used data from RLMS HSE (Russia Longitudinal Monitoring Survey of HSE) for 2019 and 2020. The paper tested the hypotheses that educational level positively affects the demand for health, that women invest in their health more responsibly than men, that the “age”- “demand for health” link has non-linear character, and the rate of health amortization is not constant during the life of an individual. We concluded that health demonstrates the features of both consumption and investment good. It was also found that income affects the demand for health just within the consumption interpretation of this construct, not within the investment one. The study showed that people with a low income tend to consume medical services more actively by spending more time in hospitals. It can be assumed that demand for medical services will increase during the economic crisis, job cuts, inflation, and a drop in real incomes of the population. The results of the study may help to predict the demand and consumption of medical services and to facilitate decision-making in Russia's healthcare system in the future.

The tourism industry and the South African economy during a pandemic and recovery prospects

The tourism industry is a substantial contributor to the South African economy. The main aim of this study is to analyse the tourism industry’s performance during the Covid-19 pandemic, with specific reference to tourism accommodation income, and to shed light on the recovery prospects of the tourism industry and the overall South African economy. The study followed a descriptive research design and quantitative method using secondary data obtained from Statistics South Africa. The data covers a span of over 16 years, from January 2007 to May 2023. Results indicated that the economic impact of the COVID-19 pandemic on the tourism industry was marked by a drastic drop in total income at the height of the pandemic, which coincided with similar performance of the overall economy. The tourism industry as well as the overall economy showed a V-shape recovery with a negative trendline suggesting their recovery potential and the need for sustained efforts by industry players and policymakers for full recovery in the medium term. Among the strategies for full recovery are diverse offerings by tourist accommodation providers, intensified digital marketing campaigns and providing exceptional service experiences.

Incomes and income inequality in Stockholm, 1870–1970: Evidence from micro data

This paper analyzes incomes and income inequality in Stockholm from 1870 to 1970. The paper builds on a new dataset of 38,022 randomly sampled Stockholm residents 1870–1950, with information on income, occupation, age, gender, and household composition. This is complemented by the Census of 1930 and a Statistics Sweden sample for 1960 and 1970. Incomes were very unequally distributed between 1870 and 1920, with Gini coefficients of pre-tax income around sixty. After 1920 inequality fell quite steadily. A drop in capital incomes contributed, and when looking at post-tax incomes the growth of progressive taxation after 1930 also contributed, but most of the high inequality up to 1920 and equalization after this date depended on the distribution of labour income. In the early 1900s professional groups had huge income advantages over workers, but this advantage was drastically reduced after 1920 when working-class incomes grew rapidly. An important mechanism of income growth was the upgrading of the jobs structure, highlighting the importance of structural change, beyond the Kuznetsian binary of agriculture–manufacturing, for understanding long-run economic inequality.

Monetary compensation schemes during the COVID-19 pandemic: implications for household incomes, liquidity constraints and consumption across the EU

This paper analyses the effect of the COVID-19 pandemic on household disposable income and household demand in the European Union (EU) during 2020, making use of the EU microsimulation model EUROMOD and nowcasting techniques. We show evidence of heterogeneity in the impact of the COVID-19 pandemic on the labour markets in EU Member States, with some countries hit substantially harder than others. Most EU Member States experience a large drop in market incomes, with poorer households bearing the brunt. Tax-benefit systems cushioned significantly the transmission of the shock to the disposable income and the household demand, with monetary compensation schemes playing a major role. Additionally, we show that monetary compensation schemes prevent a significant share of households from becoming liquidity constrained during the pandemic.

Countermeasures of Hotel Industry for Tourism Crisis Management Under the Influence of Epidemic Situation

On a global scale, the epidemic has had a great impact on tourism, and the hotel industry, as a key component of tourism, has also been seriously affected. The purpose of this paper is to study the impact of the epidemic on the hotel industry and put forward coping strategies to help the hotel industry effectively cope with the tourism crisis. First of all, the epidemic has led to a sharp decline in tourism, a sharp drop in the occupancy rate of the hotel industry and a sharp drop in income. In order to meet this challenge, the hotel industry needs to adopt the strategy of diversified income sources and reduce its dependence on the traditional tourism market. Secondly, the hotel industry should formulate more flexible cancellation policies to meet customer needs. Third, the hotel industry should strengthen cleaning and hygiene measures to ensure the health and safety of customers when they check in. This includes regular disinfection of guest rooms and public areas, provision of hand sanitizer, masks and other sanitary products. A transparent cleaning policy can improve the trust of customers. In addition, digital technology plays a key role in crisis management. Finally, staff training is the key link to deal with the crisis. This paper studies the coping strategies of crisis management in the hotel industry under the influence of epidemic situation, which is helpful for the hotel industry to tide over the crisis, maintain business sustainability and prepare for future uncertainty.

From state-controlled to free migration: The income effects of the 2008 Swedish labour-migration reform

Abstract In 2008, Sweden changed its labour-migration policy to facilitate more labour migration from countries outside the EU. Most state ambitions to shape labour migration, including practices such as the use of labour-market tests and the assessment of migrants’ human capital, were abandoned and the responsibility to select migrants was transferred to employers. We use Swedish register data and adopt a difference-in-differences approach to assess the effects of the policy change on labour migrants’ labour income, in comparison to non-EU migrants who moved to Sweden for reasons other than work. The effects of the policy change are substantial. Labour migration from outside the EU increased and its composition changed after the reform, resulting in a significant decrease in mean income. We conclude that changes in their occupational composition were the main drivers of the income drop for labour migrants. In sum, the new non-selective labour-migration policy lowered labour migrants’ mean income by opening the door to unskilled labour.

A post‐politics earnings penalty? Evidence from politicians' lifetime income trajectories (1970–2019)

AbstractPoliticians are commonly believed to gain financially from holding and/or having held office. We argue that there may often also be economic downsides to pursuing a political career and investigate whether and when politicians can (not) capitalize on their political experience. We thereby study both entry into and exit from political office and directly compare the returns to politics across government levels and types of politicians. Empirically, we build on detailed information from Norwegian administrative register data over the period 1970–2019 to study individual‐level income developments before, during and after a political career at the national and local levels (covering nearly 22,000 individuals and 700,000 person‐years). Using an event‐study methodology, we show that politicians on average witness a significant income boost during their time in office. In sharp contrast, leaving political office is on average associated with a substantial drop in income, which generally outweighs the income gain from entry into office. These findings suggest that most politicians face a net present value loss from holding office.

Impact of Covid-19 pandemic on the workload and home office in some European countries

The spread of a new and unknown viral infectious disease named the Covid-19 pandemic paralysed world without any preparation time. It has significantly changed approaches to organizational management as well as HR policy. Governments have taken immediate measures to address the challenges caused by the COVID-19 pandemic, including protecting jobs, providing financial support to businesses and households experiencing a sharp drop in income. The present study focuses on a subfield of a previous larger research, on the change in workload due to the COVID-19 pandemic and the increase in the frequency of remote work, as well as their consequences. The increase in telecommuting is one of the innovations that can clearly be attributed to the impact of the pandemic. It has become an accepted form of work in many sectors where even the professionals did not think of using it before. The research has been conducted based on the questionnaire consisted of groups of questions related to the demographic characteristics (age, gender, place of residence, position), development of the workload, and the more complicated working conditions caused by Covid19 pandemic. The respondents from Hungary, Montenegro, Spain and the United Kingdom were selected using a respondent-driven time space sampling procedure. The method of sampling and the size of the target group can be considered as limitations of our research – the statistical conditions for evaluation are nevertheless met, given the for the number of elements and normality of the sample as a whole and its individual groups. As results, authors found that the same epidemic in each country led to different workload increases and affected subordinates and non-subordinates, and women and men to different degrees. Among the effects of the crises caused by the pandemic, the increase in workload is the most significant. That must be taken into consideration in the HRM policy. The most important finding is that the increasing frequency of remote work to a certain extend can be considered as innovation. The nature of the research conducted on basis of four European countries can contribute to the future development of scientific study related the solution of similar problems in HR management and labour organization.