The Covid-19 pandemic economic impacts and government responses across welfare regimes

ABSTRACT

The Covid-19 pandemic disrupted lives across all countries, and had severe negative impacts on the global economy, with a massive loss of production and employment, and an increase in national debts. Given that the economic impacts and government responses are structurally rooted in a country’s type of welfare regime, this study examines the economic impacts and government responses in selected OECD countries as differentiated by their welfare regimes using both descriptive and statistical methods. Our descriptive findings indicate that GDP drop and higher unemployment have been less severe in the social democratic countries, and the rise in government debt has been more dramatic in the liberal countries. We also find some degree of convergence in social spending across the welfare regimes at least as long as the pandemic persists. Using panel regression analysis, we find that more testing and higher vaccination are positively associated with GDP growth. On the other hand, containment measures and emergency economic support are negatively associated with GDP growth. Moreover, the descriptive finding that the adverse impact of the pandemic on GDP has been more pronounced in liberal and conservative countries compared to the social democratic countries is corroborated by our statistical analysis.

KEYWORDS:

• Covid-19 pandemic
• economic impacts
• welfare regimes
• government responses
• OECD countries

JEL CLASSIFICATION:

• C23
• D60
• E19
• H12
• I38
• P16

Disclosure statement

No potential conflict of interest was reported by the author(s).