Real-time inequality and the welfare state in motion: evidence from COVID-19 in Spain

SUMMARY G. Montalvo and Marta Reynal-Querol?>Official statistics on economic inequality are only available at low frequency with considerable delay. This makes it challenging to assess the impact of fast-unfolding crises like COVID-19 pandemic, rapidly evaluate tailor policy responses. We propose a new methodology track income high using anonymized data from bank records for over three million account holders in Spain. Using this approach, we analyse how evolved between February November 2020 (compared same months 2019). first show that wage distribution our matches very closely official labour surveys. then document that, absence government intervention, would have increased dramatically, mainly due job losses cuts experienced by low-wage workers. The increase pre-transfer was especially pronounced among young foreign-born, regions more dependent services. Public transfers unemployment insurance schemes were effective providing safety net most affected segments population offsetting inequality. Increased is primarily driven differential changes employment rate. Indeed, individual-level regressions, find course probability being employed decreased drastically workers lower part pre-COVID distribution, cohorts foreign-born.