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Too little but not too late. Nowcasting poverty and cash transfers' incidence in Uruguay during COVID-19's crisis

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  • Matías Brum

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Mauricio de Rosa

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Abstract

The economic crisis triggered by COVID-19 is causing a world-wide massive economic downturn, and what is likely to be the deepest GDP contraction for Latin America since the beginning of the XXth century. We microsimulate the short-run effect of the crisis on the poverty rate for the Uruguayan case based on household survey data, publicly available information on both cash-transfers and the increase in unemployed formal wage-earners applying for unemployment benefits, as well as macro-economic estimates of the likely GDP contraction. By combining these data sources, we are able to estimate the effect of the crisis on formal, informal and self-employed workers, while providing full micro-macro consistency to our results. We find that during the first full month of the lock-down, the poverty rate reaches 11.7%, an increase of over 36%. Moreover, new cash transfers implemented by the government have a positive but very limited effect in mitigating this poverty spike. We estimate that most of this increase in poverty could be neutralized with cash-transfers worth less than 0.5% of Uruguay’s annual GDP.

Suggested Citation

  • Matías Brum & Mauricio de Rosa, 2020. "Too little but not too late. Nowcasting poverty and cash transfers' incidence in Uruguay during COVID-19's crisis," Documentos de Trabajo (working papers) 20-09, Instituto de Economia - IECON.
  • Handle: RePEc:ulr:wpaper:dt-09-20
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    File URL: https://hdl.handle.net/20.500.12008/9042
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; nowcasting; poverty; microsimulations; developing countries; Uruguay;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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