The COVID-19 economic shock has impacted workers asymmetrically: it has penalized relatively more workers with unstable and less protected jobs, possibly amplifying existing inequalities. This paper simulates the short term effect of the crisis on the distribution of equivalized labour income in Italy. It also assesses the effectiveness of the social insurance benefits in place before the crisis in smoothing labour income losses and of the temporary measures adopted by the Government.
The economic repercussions of the pandemic affect low-income households more intensively, implying a substantial increase in labour income inequality. Workers in poorer households have fewer possibilities to work from home, are more likely to be employed in locked-down sectors and in unstable jobs. The social insurance benefits temporarily introduced by the Italian Government to deal with the crisis are able to compensate for the increased inequality significantly more than the pre-crisis measures.
