Financial distress during the pandemic: the role of government support

We investigate how (the timing of) COVID-19 economic support measures affected household financial distress across 50+ Europeans. Using SHARE data, we track changes in financial well-being before, during, and after the pandemic. Using policy data from the Oxford COVID-19 Government Response Tracker, we distinguish between countries that implemented support at an early versus a later stage. Exploiting a triple-difference identification strategy, we show that timely government interventions significantly reduced financial distress for working-age households experiencing job interruption, while delayed responses led to increased financial strain. The effect is robust to different specificities of the identification strategy. Our findings highlight the importance of not only the generosity, but also timing of fiscal support in times of crisis.