The Furlough Scheme and Wealth Inequality: Evidence from a DSGE Simulation
Title
The Furlough Scheme and Wealth Inequality: Evidence from a DSGE Simulation
Subject
Economics
Creator
Henry Austin
Date
2025
Abstract
This paper assesses the impact of the Coronavirus Job Protection (furlough) Scheme on wealth inequality using a Dynamic Stochastic General Equilibrium (DSGE) framework. I develop and solve a model with heterogenous households and an interventionist government that intervenes in the labour market with a wage subsidy, designed to imitate the furlough scheme. The model is calibrated to match existing empirical estimates and simulated against a one standard deviation negative shock to productivity. The simulations reveal that the Furlough scheme is associated with a significant increase in wealth inequality when compared to a counterfactual economy.
Files
Collection
Citation
Henry Austin, “The Furlough Scheme and Wealth Inequality: Evidence from a DSGE Simulation,” URSS SHOWCASE, accessed October 1, 2025, https://urss.warwick.ac.uk/items/show/785.