The impact of the COVID-19 pandemic on household income, consumption, and saving

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Abstract

The primary factors that were initially assumed to contribute to a decline in household income were job losses, which affect the decrease in consumption (Organisation for Economic Co-operation and Development [OECD], 2020; Doerr & Gambacorta, 2020). Kosovo’s government has taken measures of social distancing, having a major impact on households such as the impact of dismissal due to the closure of businesses indefinitely. This regime is continuing from the different waves of COVID-19 variants and the family income as it goes and decreases. Therefore, the purpose of this study is to measure the impact of the COVID-19 pandemic on household income including household consumption and savings for the years 2020–2021. The study uses a quantitative research method, thus, for primary data collection, the online questionnaire is used. The latent variable in this paper is the COVID-19 pandemic, while the factors that determine the latent variable are: savings, job loss, family income before the pandemic, and consumption expenditures. The study concludes that COVID-19 has a negative and significant impact on family income, saving, job loss, and consumption expenditures. The results from the structural equation modeling (SEM) are significant and the likelihood ratio (LR) test is 47.46. These findings and those of Martin, Hallegatte, and Walsh (2020), Dossche, Kolndrekaj, and Slacalek (2021), and Bundervoet, Davalos, and Garcia (2021) are consistent.

Keywords: COVID-19, Family Income, Savings, Consumption, SEM Model

Authors’ individual contribution: Conceptualization — S.T., R.B., G.S., and A.G.; Methodology — R.B.; Software — S.T. and R.B.; Validation — S.T.; Formal Analysis — R.B.; Investigation — S.T. and R.B.; Resources — S.T., G.S., and A.G.; Data Curation — S.T. and A.G.; Writing — Original Draft — S.T., R.B., G.S., and A.G.; Writing — Review & Editing — S.T., R.B., G.S., and A.G.; Visualization — S.T. and A.G.; Supervision — S.T. and R.B.; Project Administration — S.T. and R.B.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: E3, G5, D1

Received: 01.06.2022
Accepted: 16.12.2022
Published online: 20.12.2022

How to cite this paper: Tafa, S., Bajrami, R., Shabani, G., & Gashi, A. (2022). The impact of the COVID-19 pandemic on household income, consumption, and saving [Special issue]. Corporate & Business Strategy Review, 3(2), 296–305. https://doi.org/10.22495/cbsrv3i2siart11