Novel welfare state responses in times of crises: the COVID-19 crisis versus the Great Recession

Abstract

Using microsimulation tools, we explore the social policy responses to the Great Recession and the COVID-19 crisis, and their impact on preserving living standards in Ireland. During the Great Recession, the focus was on cost reduction. By contrast, during the COVID-19 crisis, the focus was on mitigating the impact on household incomes. In addition, an innovation in joint public and private responses emerged through social partnership. We find a stronger policy response during the COVID-19 crisis than the Great Recession. The COVID-19 crisis was more rapid, leaving more individuals out of work, thus family support was weaker. This was compensated by stronger private support through social partnership. Consequently, those with lower incomes had larger disposable incomes at the onset of the crisis; an effect that reduced with policy learning. We find increasing trust in public institutions during the COVID-19 crisis as opposed to a decline during the Great Recession.

Evaluating the Impact of Government Social Protection on Households’ Welfare During the Covid-19 Pandemic in South Africa

“…Ideally, social protection actions by government were warranted to sustain markets and stimulate food demand. Compared to the Global Financial Crisis (GFC), O'Donoghue et al (2021) evaluates the social policy responses to the Covid 19 pandemic in Ireland. They find stronger social policy responses during Covid 19 compared to the GFC.…”

Welfare and Distributional Impact of Soaring Prices in Europe

“…Looking back to recent crises (O'Donoghue et al, 2022), we know that a solidarity-focused policy response during the COVID-19 crisis protected living standards and enhanced trust in institutions in many countries. This was facilitated by lower interest rates from ECB.…”

The Transformation of Public Policy Analysis in Times of Crisis - A Microsimulation-Nowcasting Method Using Big Data

“…The expansion in data availability and timeliness enabled methodological advancements to facilitate close to real time decision making (Brewer and Tasseva, 2020;Bronka et al, 2020;O'Donoghue et al, 2020;Li et al, 2022;O'Donoghue et al, 2022;Sologon et al, 2022), particularly in the area of microsimulation modelling which is a long-established analytical tool for understanding the impact of public policy on different population groups (O'Donoghue, 2014); microsimulation models provided data analytics using "big data" long before the emergence of the "big data" revolution.…”