Impact of the COVID-19 Pandemic on the Financial Situation of Rural and Urban Households in Poland

The COVID-19 pandemic not only caused a global health crisis but also had a huge impact on household finances. This research aimed to examine the financial situation of rural and urban households in Poland between 2018 and 2022 from a multidimensional perspective. In a unidimensional approach, the financial situation of households was analyzed separately for their income, expenditures, savings rate, and shares of fixed expenses. In a multidimensional approach, the analysis used a synthetic index constructed for all these variables combined, employing the TOPSIS method and drawing on microdata from the Polish Central Statistical Office that totaled approximately 150,000 households. It was found that despite the pandemic outbreak, which led to major changes in the labor market, government-introduced organizational and legal measures protected the income of Polish households from decline. Indeed, income was increasing up until 2021, with a modest fall in 2022, which was less severe in rural households (by about 2%) than in urban ones (by 6%). A more immediate response to the outbreak was observed in consumer spending, which fell sharply, while the food share in consumption increased at similar levels in rural and urban areas. Regression analysis showed that compared to 2019, the pandemic worsened the financial situation of Polish households, but only in 2020 and 2022 were these changes statistically significant. In 2021, the financial situation improved slightly, but the change was not statistically significant. Before the pandemic, the synthetic assessment of the financial situation in rural areas was lower than in urban ones, and the pandemic period did not reduce these differences, showing no convergence between poorer rural areas and richer urban ones. Diagnosing and monitoring the household financial situation are crucial steps for achieving the social dimension goals of sustainable development. Research on the pandemic’s effects on household finances provides valuable information that can help develop effective strategies to counter future crises while supporting the social dimension of the sustainable development strategy.