The impact of the COVID-19 pandemic on the employment situation and financial well-being of families with children in Austria: Evidence from the first ten months of the crisis

Objective: This study investigates the impact of the COVID-19 pandemic on the employment situation of parents and in turn on the subjective financial well-being of families with children in Austria.

Background: The pandemic had strong repercussions on the Austrian labour market. The short-time work (STW) programme covered a third of employees in the first half of 2020 and helped to maintain employment levels. We provide evidence on how an unprecedented labour market crisis of this sort and in particular the exceptionally wide use of STW had affected the employment situation of parents and the financial well-being of different types of families.

Method: The study draws on register data and representative panel survey data. The latter cover 905 families with minor children and include information on the employment situation of parents and the financial well-being of families before crisis onset, three months and ten months after its onset.

Results: Register data show that mothers were not more strongly affected by the labour market crisis of 2020 than childless women or fathers. According to survey data, about a third of couples with minor children experienced income losses. Despite the wide use of STW and government support to families, the share of families in financial difficulties has substantially increased, especially among those with many children and single parents, many of whom were at risk of poverty already before the crisis.

Conclusion: Substantial shares of dual-earner families that had low poverty risks before the crisis were in financial difficulties in 2020. Potential spill-over effects of financial shocks on children are discussed.