Falls in real earnings hit well-off households particularly hard after the recession, while many poorer households were initially relatively protected by the benefits system. But poorer households are the hardest hit by the benefit cuts being implemented in the years to 2015–16. The likely net result is that income losses resulting from the recession will be spread quite evenly across income groups.
These are among the key findings of new IFS research published today, in a pre-released article from a special issue of Fiscal Studies to be launched on Wednesday 12th June. This research provides the first comprehensive estimate of what the distributional impact of the recession will be in the medium term.