The Role of Automatic Stabilizers and Emergency Tax–Benefit Policies During the COVID-19 Pandemic: Evidence from Ecuador

H. Xavier Jara, Lourdes Montesdeoca and Iva Tasseva
Additional contact information
Lourdes Montesdeoca: Facultad Latinoamericana de Ciencias Sociales (FLACSO) Sede Ecuador

The European Journal of Development Research, 2022, vol. 34, issue 6, No 8, 2787-2809

Abstract: Abstract By combining household survey data before and during the COVID-19 pandemic with detailed tax-benefit simulations, this paper quantifies the distributional effects of COVID-19 in Ecuador and the role of tax–benefit policies in mitigating the immediate impact of the economic shocks. Our results show a dramatic increase in income poverty and inequality between December 2019 and June 2020, the period when the economy was hit the hardest. The national poverty headcount increases from 25.7 to 58.2%, the extreme poverty headcount from 9.2 to 38.6%, and the Gini coefficient from 0.461 to 0.592. On average, household disposable income drops by 41%. The new Family Protection Grant provides income protection for the poorest income decile. However, overall tax–benefit policies do little to mitigate the losses in household incomes due to the pandemic. Informal workers, in particular, are left unprotected due to the lack of income support in the event of unemployment.

Keywords: COVID-19; Microsimulation; Poverty; Inequality; Ecuador (search for similar items in EconPapers)
JEL-codes: D31 E24 H24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1057/s41287-021-00490-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The role of automatic stabilizers and emergency tax–benefit policies during the COVID-19 Pandemic: evidence from Ecuador (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:eurjdr:v:34:y:2022:i:6:d:10.1057_s41287-021-00490-1

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41287/PS2

DOI: 10.1057/s41287-021-00490-1

Access Statistics for this article

The European Journal of Development Research is currently edited by Spencer Henson and Natalia Lorenzoni

More articles in The European Journal of Development Research from Palgrave Macmillan, European Association of Development Research and Training Institutes (EADI) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().