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Households in Transit: COVID-19 and the Changing Measurement of Welfare

Author

Listed:
  • Caron, Laura

    (Columbia University)

  • Tiongson, Erwin R.

    (Georgetown University)

Abstract

The COVID-19 pandemic placed new constraints and prices on commuting to work around the world. However, traditional methods of measuring household welfare (and, accordingly, poverty and inequality) based on expenditures have not considered these changes. First, we present theory showing significant mismeasurement of welfare for households who can shift into remote work during the pandemic. We then propose methods to impute transportation cost equivalents for household expenditure aggregates. We use Georgia as a case study to compare these methods and assess impacts on poverty and inequality. The proportion of remote work is low, only about 9%, meaning that the impact on overall inequality is negligible. However, considering transportation costs can result in up to a 40% reduction in the measured poverty rate among remote-working households.

Suggested Citation

  • Caron, Laura & Tiongson, Erwin R., 2022. "Households in Transit: COVID-19 and the Changing Measurement of Welfare," IZA Discussion Papers 15670, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp15670
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D30 - Microeconomics - - Distribution - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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