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Income and Poverty in the COVID-19 Pandemic

Author

Listed:
  • Jeehoon Han

    (Zhejiang University)

  • Bruce D. Meyer

    (University of Chicago)

  • James X. Sullivan

    (University of Notre Dame)

Abstract

This paper addresses the economic impact of the COVID-19 pandemic by providing timely and accurate information on the impact of the current pandemic on income and poverty to inform the targeting of resources to those most affected and assess the success of current efforts. We construct new measures of the income distribution and poverty with a lag of only a few weeks using high-frequency data from the Basic Monthly Current Population Survey (CPS), which collects income information for a large, representative sample of US families. Because the family income data for this project are rarely used, we validate this timely measure of income by comparing historical estimates that rely on these data to estimates from data on income and consumption that have been used much more broadly. Our results indicate that at the start of the pandemic, government policy effectively countered its effects on incomes, leading poverty to fall and low percentiles of income to rise across a range of demographic groups and geographies. Simulations that rely on the detailed CPS data and that closely match total government payments made show that the entire decline in poverty that we find can be accounted for by the rise in government assistance, including unemployment insurance benefits and the Economic Impact Payments. Our simulations further indicate that of those losing employment the vast majority received unemployment insurance, though this was less true early on in the pandemic, and receipt was uneven across the states, with some states not reaching a large share of their out of work residents. Updated results during the pandemic for a subset of the tables in this article can be found at povertymeasurement.org.

Suggested Citation

  • Jeehoon Han & Bruce D. Meyer & James X. Sullivan, 2020. "Income and Poverty in the COVID-19 Pandemic," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 85-118.
    • Handle: RePEc:bin:bpeajo:v:51:y:2020:i:2020-02:p:85-118
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    References listed on IDEAS

    as
    1. Bruce D. Meyer & Derek Wu & Victoria R. Mooers & Carla Medalia, 2019. "The Use and Misuse of Income Data and Extreme Poverty in the United States," NBER Working Papers 25907, National Bureau of Economic Research, Inc.
    2. Natalie Cox & Peter Ganong & Pascal Noel & Joseph Vavra & Arlene Wong & Diana Farrell & Fiona Greig & Erica Deadman, 2020. "Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 35-82.
    3. Burkhauser, Richard V. & Corinth, Kevin & Elwell, James & Larrimore, Jeff, 2019. "Evaluating the Success of President Johnson's War on Poverty: Revisiting the Historical Record Using a Full-Income Poverty Measure," IZA Discussion Papers 12855, Institute of Labor Economics (IZA).
    4. Richard V. Burkhauser & Kevin Corinth & James Elwell & Jeff Larrimore, 2019. "Evaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using an Absolute Full-Income Poverty Measure," NBER Working Papers 26532, National Bureau of Economic Research, Inc.
    5. Bruce D. Meyer & James X. Sullivan, 2012. "Winning the War: Poverty from the Great Society to the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 133-200.
    6. Bruce D. Meyer & Derek Wu & Grace Finley & Patrick Langetieg & Carla Medalia & Mark Payne & Alan Plumley, 2020. "The Accuracy of Tax Imputations: Estimating Tax Liabilities and Credits Using Linked Survey and Administrative Data," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 459-498, National Bureau of Economic Research, Inc.
    7. Ganong, Peter & Noel, Pascal & Vavra, Joseph, 2020. "US unemployment insurance replacement rates during the pandemic," Journal of Public Economics, Elsevier, vol. 191(C).
    8. Douglas Almond & Bhashkar Mazumder, 2005. "The 1918 Influenza Pandemic and Subsequent Health Outcomes: An Analysis of SIPP Data," American Economic Review, American Economic Association, vol. 95(2), pages 258-262, May.
    9. Rebecca M. Blank, 2008. "Presidential address: How to improve poverty measurement in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(2), pages 233-254.
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    More about this item

    Keywords

    COVID-19; US economy; family income; poverty;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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