Subjective Perceptions of the Impact of the Global Economic Crisis in Europe and Central Asia : The Household Perspective
This paper analyzes the subjective impact of the global economic crisis on households in Europe and Central Asia and relates subjective impacts to consumption, actual shocks, and coping strategies, using the 2010 Life in Transition Survey. Two-thir...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120312135856 http://hdl.handle.net/10986/3283 |
| Summary: | This paper analyzes the subjective
impact of the global economic crisis on households in Europe
and Central Asia and relates subjective impacts to
consumption, actual shocks, and coping strategies, using the
2010 Life in Transition Survey. Two-thirds of respondents in
Europe and Central Asia report their household was
subjectively affected, primarily through the labor market.
The findings underscore the limitations of cross-country
comparisons of subjective perceptions, due to reporting
biases. Within countries, richer households felt a decline
in their relative income position, consistent with evidence
from household budget surveys that the crisis reduced the
consumption of the middle and upper classes. But the
analysis also finds that poorer households report being
(subjectively) affected by the crisis more. Differences in
the feasibility of coping strategies may help explain
variations in subjective perceptions: the poorest were
forced to reduce their staple food consumption and health
spending, and tended to depend on public safety nets. Richer
households had more options to cope, pursuing so-called
"active strategies" (such as increasing their
labor supply), borrowing, and cutting spending on
non-essentials. Transition countries differed significantly
from western European comparator countries in that public
safety nets had lower coverage, private safety nets and
informal insurance mechanisms could not meet the shortfall
in income, and a large proportion of their populations
reduced the consumption of basic necessities. The paper
finds subjective perceptions of the impact of the crisis to
be relevant to socio-political outcomes: the harder the
impact, the lower the life satisfaction level and the more
negative the assessment of government performance. |
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