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The Distributional Consequences of Social Distancing on Poverty and Labour Income Inequality in Latin America and the Caribbean

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  • Delaporte, Isaure
  • Escobar, Julia
  • Peña, Werner

Abstract

This paper evaluates the distributional consequences of social distancing due to the COVID-19 pandemic on poverty and labour income inequality in 20 Latin American and Caribbean (LAC) countries. We gather detailed information from national laws and decrees on the strictness and the duration of the lockdown in each country and use rich harmonised household surveys from the IADB. We estimate the share of individuals that are potentially able to remain active under the first phase of the lockdown by constructing the Lockdown Working Ability (LWA) index which takes into account individuals' ability to work from home but also whether their occupation is affected by workplace closures or mobility restrictions. We find that, on average, 1 worker out of 2 is able to work under the lockdown in the LAC region. We document considerable variation in the share of individuals able to work under the lockdown across countries and within countries across occupations, economic activities and specific population groups. Based on the LWA index, we then estimate individual's potential labour income losses and examine changes in poverty and labour income inequality. We find an increase in poverty and labour income inequality in the majority of the LAC countries due to social distancing. At the national level, the highest increase in the headcount poverty index is 1.4 pp and the highest increase in the Gini coefficient is 2 pp. Decomposing overall labour income inequality in the LAC region, we find that social distancing has lead to a small decrease (-0.1 pp) in inequality between countries but to an increase (2 pp) in inequality within countries. Finally, we document that 63% of the dispersion in the labour income loss across countries is explained by the sectoral/occupational structure of the economies, while the rest is explained by the type of lockdown policy that was implemented.

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  • Delaporte, Isaure & Escobar, Julia & Peña, Werner, 2020. "The Distributional Consequences of Social Distancing on Poverty and Labour Income Inequality in Latin America and the Caribbean," GLO Discussion Paper Series 682, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:682
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    Cited by:

    1. Chijioke O Nwosu & Umakrishnan Kollamparambil & Adeola Oyenubi, 2022. "Socio-economic inequalities in ability to work from home during the coronavirus pandemic," The Economic and Labour Relations Review, , vol. 33(2), pages 290-307, June.
    2. Caselli, Mauro & Fracasso, Andrea, 2021. "Covid-19 and Technology," GLO Discussion Paper Series 1001, Global Labor Organization (GLO).
    3. Kosteas, Vasilios D. & Renna, Francesco & Scicchitano, Sergio, 2022. "Covid-19 and Working from Home: toward a "new normal"?," GLO Discussion Paper Series 1013, Global Labor Organization (GLO).
    4. A. Cetrulo & D. Guarascio & M. E. Virgillito, 2022. "Working from home and the explosion of enduring divides: income, employment and safety risks," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 345-402, July.
    5. Stefano Costa & Stefano De Santis & Giovanni Dosi & Roberto Monducci & Angelica Sbardella & Maria Enrica Virgillito, 2021. "Firm responses to the pandemic crisis: sticky capabilites and widespread restructuring," LEM Papers Series 2021/48, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    6. Nora Lustig & Valentina Martinez Pabon & Guido Neidhöfer & Mariano Tommasi, 2020. "Short and Long-Run Distributional Impacts of COVID-19 in Latin America," Working Papers 2013, Tulane University, Department of Economics.
    7. Nora Lustig & Valentina Martinez Pabon & Federico Sanz & Stephen D. Younger, 2021. "The Impact of COVID-19 and Expanded Social Assistance on Inequality and Poverty in Argentina, Brazil, Colombia and Mexico," Commitment to Equity (CEQ) Working Paper Series 92, Tulane University, Department of Economics.
    8. -, 2022. "How to finance sustainable development: Recovery from the effects of COVID-19 in Latin America and the Caribbean," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 13 edited by Eclac, December.
    9. Giorgia Menta, 2021. "Poverty in the COVID-19 Era: Real Time Data Analysis on Five European Countries," Working Papers 568, ECINEQ, Society for the Study of Economic Inequality.
    10. Qi Zhang & Xinxin Zhang & Qi Cui & Weining Cao & Ling He & Yexin Zhou & Xiaofan Li & Yunpeng Fan, 2022. "The Unequal Effect of the COVID-19 Pandemic on the Labour Market and Income Inequality in China: A Multisectoral CGE Model Analysis Coupled with a Micro-Simulation Approach," IJERPH, MDPI, vol. 19(3), pages 1-21, January.

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    More about this item

    Keywords

    COVID-19; Social Distancing; Teleworking; Employment; Labour Income Inequality; Poverty;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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