Understanding the impact of Covid-19 on income: labour market changes and policy solutions

An accurate picture of the distribution of household incomes post-pandemic is needed in order to examine the impact of the pandemic on household incomes and to assess the effectiveness of policy to tackle these issues. However, comprehensive data on household incomes has a lag of at least a year. This report examines trends in the labour market over the course of the pandemic and provides estimates of household incomes at the start of the financial year 2022-23. It further models the effects of any changes in estimated income on income distribution, poverty, and inequality in Scotland, and examines the effects of a small number of tax and benefit policies using microsimulation methods.