Households' Compensation and Accumulation of Economic Risk during the Pandemic in Germany

The Zoom link can be requested at colloquia-a [at] mzes.uni-mannheim.de.

Abstract
Joint work with Hannah Zagel and Anette Fasang

We examine the economic well-being of households in East and West Germany during the Covid-19 pandemic on the basis of job-specific factors and household structure. So far, little research has been done to date on how economic risks accumulate and compensate for each other in households. Risk’s accumulation and compensation can occur either through the combination of individual and job-related characteristics of household members or through the increase or reduction of resources over time depending on the employment histories before the pandemic. Our study considers the economic well-being of different households depending on their differential exposure to the government measures to contain the pandemic. We first create a typology of job-specific risks based on the exposure of different labor market segments to the lockdown measures. For this purpose, we retrieve information from the decrees issued by the German federal states in March-April 2020 as well as from Eurostat and the German Federal Employment Agency on economic performance to distinguish occupational sectors according to whether they were open or closed during the lockdown and/or whether they recorded revenue losses. We use data from the last available wave of the Microcensus to map the distribution of these job-specific risks across federal states. Based on the longitudinal component of the SOEP data, we then reconstruct household members’ employment histories to link the potential exposure to the lockdown measures and the economic loss to the accumulation of risks within households in the years before the pandemic (e.g. repeated unemployment or precarious employment of one or more adult members as well as the temporal overlap of these episodes across members’ employment trajectories). This analytical design enables us to evaluate the extent to which financial reserves are available for short- and medium-term bridging of pandemic-related income losses.