Session B4: The consequences of the crisis and austerity measures taken on the distribution of income

Session organisers: Manos Matsaganis (Athens University of Economics and Business), Chrysa Leventi (University of Essex),  and Holly Sutherland (University of Essex)



1. Alari Paulus & Francesco Figari, The distributional effects of fiscal consolidation in nine EU countries 

2. Katya Navicke & Olga Rastrigina, Nowcasting indicators of poverty risk in the European Union: a microsimulation approach

3. Manos Matsaganis & Chrysa Leventi, Distributional implications of the crisis in Greece in 2009-2012


Discussant: Brian Nolan


The current crisis can be seen as having two components. On the one hand, the austerity policies taken to reduce fiscal deficits, and on the other hand, the wider recession causing business closures, job losses as well as reductions in the real value of incomes, savings and assets. These components are to some extent interrelated. Although the size of the relevant effects is hotly debated, it is generally accepted that fiscal consolidation will cause lower (or negative) GDP growth, which in turn will undermine the government’s attempt to reduce the budget deficit.
Keeping this connection in mind, this session aims to review recent results of microsimulation analyses on the impact of the current crisis in several countries, disentangling the effect of austerity policies vis-à-vis the wider recession.
Specifically, the session attempts answer three questions:

  1. What can microsimulation tell us about trends in disposable incomes and relative poverty in the EU in recent years (for which official statistics are not yet available)?
  2. What are the distributional effects of the different policy mixes as actually implemented in a number of EU member states in order to achieve varying degrees of fiscal consolidation (abstracting from the effects of the wider recession)?
  3. How can the joint analysis of austerity policies as well as the wider recession enhance our understanding of changes in the distribution of incomes in those countries where the crisis is most severe?


Background documents: