Welfare compensation for unemployment in the Great Recession

Mariña Fernández Salgado, Francesco Figari, Holly Sutherland, Alberto Tumino

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This paper analyzes the extent to which tax-benefit systems provide an automatic stabilization of income for those who became unemployed at the onset of the Great Recession. The focus of the analysis is on the compensation for earnings lost due to unemployment which is channeled through the welfare systems to this group of people who are clearly vulnerable to the recession’s adverse effects. In order to assess the impact of unemployment on household income, counterfactual scenarios are simulated by using EUROMOD, the EU-wide microsimulation model, integrated with information from the EU-LFS data. This paper provides evidence on the differing degrees of relative and absolute resilience of the household incomes of the new unemployed. These arise from the variations in the protection offered by the national tax-benefit systems and from the personal and most recently at risk of unemployment in the countries considered.
Original languageEnglish
Pages (from-to)S177-S204
JournalReview of Income and Wealth
Issue numberS1
Early online date23 Apr 2013
Publication statusPublished - May 2014


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