Two crises, two policy responses in Spain? Poverty among working-age population in the Great Recession and Covid-19.

Abstract

This study examines the poverty risk of the working-age population in Spain during the Great Recession and the Covid-19 pandemic, the two major recent economic crises that generated significant social impacts across Europe. The broad aim is to compare the likelihood of moderate and severe poverty in both downturns. To achieve this, the study pursues three specific goals: tracking how poverty evolved over time, identifying the risk profiles associated with each crisis, and analysing how the structure of household income, particularly access to social benefits and labour earnings, helps cushion the impact of adverse economic periods. The analysis draws on data from the Spanish sample of the European Union Statistics on Income and Living Conditions (EU-SILC) for 2008–2020, which includes detailed information on personal and household income as well as socio-economic characteristics. The findings show that the Great Recession had a deeper and more persistent impact on poverty, especially severe poverty. In contrast, the Covid-19 crisis produced a faster but more short-lived increase in poverty, partly mitigated by policy measures such as furlough schemes and more flexible access to several social benefits. An increasingly relevant strategy to prevent economic vulnerability is the combination of employment with social transfers, along with the allocation of various benefits at the household level. Overall, the results emphasise the importance of designing social protection mechanisms that both align with labour-market opportunities and effectively target the most vulnerable groups within the working-age population