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The informal sector and Covid‐19 economic impacts: The case of Bahia, Brazil

Author

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  • Gervásio Ferreira dos Santos
  • Luiz Carlos de Santana Ribeiro
  • Rodrigo Barbosa de Cerqueira

Abstract

This paper aims to simulate the economic impacts of the withdrawal of informal workers from the labour market due to the social isolation policy implemented during the Covid‐19 pandemic in Bahia state, Brazil, where 66% of workers work in the informal sector. We also consider the government income compensation policy to make up part of their income. The partial hypothetical extraction method was used in a regional input–output matrix, base year 2012 with 42 economic sectors. Our simulations show that the withdrawal of informal workers decreases the productive capacity and leads to strong negative impacts on the economy, mainly in the service sectors. On the other hand, the income compensation policy mitigates the negative impacts by about 50%. Moreover, the public administration is the least impacted sector because it is mostly made up of formal workers. Este artículo tiene por objeto simular las repercusiones económicas de la retirada del mercado de trabajo de los trabajadores del sector informal debido a la política de aislamiento social impuesta durante la pandemia de COVID‐19 en el estado de Bahía de Brasil, en el que el 66% de los trabajadores trabajan en el sector informal. También se estudió la política de compensación de ingresos del gobierno como contribución a los ingresos de los trabajadores. Se utilizó el método de extracción hipotética parcial en una matriz regional de input‐output, usando 2012 como año base con 42 sectores económicos. Las simulaciones muestran que la retirada de los trabajadores del sector informal disminuye la capacidad productiva y conduce a fuertes impactos negativos en la economía, principalmente en los sectores de servicios. Por otro lado, la política de compensación de ingresos mitiga los impactos negativos en un 50% aproximadamente. Además, la administración pública es el sector menos afectado porque está compuesto en su mayor parte por trabajadores del sector formal. ブラジルのバイア州では労働者の66%がインフォーマルセクターで働いているが、本稿では、新型コロナウイルス感染症 (COVID‐19)大流行時に実施された社会的隔離政策によるインフォーマル労働者の労働市場からの撤退の経済的影響をシミュレートする。また、政府が彼らの所得の一部を補償する所得補償政策を考察する。2012年を基準とし、42の経済セクターを対象とした地域の産業連関マトリクスで、部分的仮説的抽出を行った。シミュレーションから、インフォーマル労働者の撤退が生産能力を低下させ、主にサービスセクターの経済に強いマイナスの影響をもたらすことが示された。一方、所得補償政策はマイナスの影響を約50%緩和する。さらに、行政は、大部分が正規労働者で構成されているため、最も影響を受けにくいセクターである。

Suggested Citation

  • Gervásio Ferreira dos Santos & Luiz Carlos de Santana Ribeiro & Rodrigo Barbosa de Cerqueira, 2020. "The informal sector and Covid‐19 economic impacts: The case of Bahia, Brazil," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(6), pages 1273-1285, December.
  • Handle: RePEc:bla:rgscpp:v:12:y:2020:i:6:p:1273-1285
    DOI: 10.1111/rsp3.12366
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    1. Arceo-Gomez, Eva O. & Campos-Vazquez, Raymundo M. & Esquivel, Gerardo & Alcaraz, Eduardo & Martinez, Luis A. & Lopez, Norma G., 2023. "The impact of COVID-19 infection on labor outcomes of Mexican formal workers," World Development Perspectives, Elsevier, vol. 29(C).
    2. Teurai Rwafa-Ponela & Susan Goldstein & Petronell Kruger & Agnes Erzse & Safura Abdool Karim & Karen Hofman, 2022. "Urban Informal Food Traders: A Rapid Qualitative Study of COVID-19 Lockdown Measures in South Africa," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    3. Eduardo Rodrigues Sanguinet & Augusto Mussi Alvim & Miguel Atienza & Adelar Fochezatto, 2021. "The subnational supply chain and the COVID‐19 pandemic: Short‐term impacts on the Brazilian regional economy," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(S1), pages 158-186, November.

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