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Social Protection and Informality in Latin America during the COVID-19 Pandemic

Author

Listed:
  • Busso, Matías
  • Camacho, Juanita
  • Messina, Julián
  • Montenegro, Guadalupe

Abstract

Latin American governments swiftly implemented income assistance programs to sustain families' livelihoods during COVID-19 stay-at-home orders. This paper analyzes the potential coverage and generosity of these measures and assesses the suitability of current safety nets to deal with unexpected negative income shocks in 10 Latin American countries. The expansion of pre-existing programs (most notably conditional cash transfers and non-contributory pensions) during the COVID-19 crisis was generally insufficient to compensate for the inability to work among the poorest segments of the population. When COVID-19 ad hoc programs are analyzed, the coverage and replacement rates of regular labor income among households in the first quintile of the country's labor income distribution increase substantially. Yet, these programs present substantial coverage challenges among families composed of fundamentally informal workers who are non-poor, but are at a high risk of poverty. These results highlight the limitations of the fragmented nature of social protection systems in the region.

Suggested Citation

  • Busso, Matías & Camacho, Juanita & Messina, Julián & Montenegro, Guadalupe, 2020. "Social Protection and Informality in Latin America during the COVID-19 Pandemic," IDB Publications (Working Papers) 10849, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:10849
    DOI: http://dx.doi.org/10.18235/0002865
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    Cited by:

    1. Nurgun Kul Parlak & Ayse Nur Ciftci, 2022. "Pandeminin Kayit Disi Istihdami Dislama Etkisi: Turkiye’de Formel-Enformel Emek Piyasalarindaki Ayrisma," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(82), pages 93-135, June.

    More about this item

    Keywords

    Latin America; Informality; COVID-19; social insurance;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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