The 2020 Covid-19 Pandemic and Foreign Workers’ Income-Consumption Profiles: Accounts from Two Micro-Level Surveys

Applying rich micro-level data for 2013 and 2020, this paper juxtaposes the living conditions and consumption profiles of foreign workers in Kuwait. It contributes to a growing literature on foreign workers by focusing on migrant workers’ consumption profiles and their heterogeneity following the COVID-19 income shock. The paper compares the 2020 income and consumption profile with that of 2013. Moreover, since foreigners represent the majority of the population, the paper inquires if the most commonly used consumption functions apply in the case of foreign households in Kuwait. Findings corroborate that the migrant community bore the brunt of the COVID-19 impact in terms of employment, earnings, and living conditions. Our research also corroborates that the consumption-income decisions of foreign workers in Kuwait are broadly congruent with Friedman’s permanent income hypothesis and that, for given income levels, consumption heterogeneity holds for foreign workers according to age cohorts, thereby giving some credence to the life cycle hypothesis. Finally, Kuwait’s foreign workers consume high proportions of their incomes derived from business activities, as opposed to workers whose incomes derive mainly from wages and salaries. For comparative purposes, the analysis is benchmarked against Kuwaiti households comprising citizens with more endowments, rights, and privileges, including ability to borrow to finance random consumption peaks.