Abstract
This paper uses the recently developed New Zealand Economic Security Index (ESI) to explore the potential impacts of the COVID-19 pandemic on New Zealand households. The ESI is a measure of economic insecurity that identifies subgroups of the population that are susceptible to negative year-on-year income shocks. The ESI shows that insecurity closely follows the business cycle in New Zealand, which may concern policymakers tackling the effects of the COVID-19 pandemic. If income losses follow the pattern observed in the Global Financial Crisis (GFC), demographics groups most susceptible to negative income shocks include Pākehā, retirees and individuals with fewer educational qualifications, while households in the highest income quintile are more protected from shocks relative to middle income households. Exposure to negative income risk is an important economic stressor that is rarely measured directly. Our method of calculating the ESI could be adapted by Statistics New Zealand and published on an annual basis.