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

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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; Ecuador; inequality; microsimulation; poverty; coronavirus (search for similar items in EconPapers)
JEL-codes: D31 E24 H24 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in European Journal of Development Research, 1, December, 2022, 34(6), pp. 2787 - 2809. ISSN: 0957-8811

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http://eprints.lse.ac.uk/112738/ Open access version. (application/pdf)

Related works:
Journal Article: The Role of Automatic Stabilizers and Emergency Tax–Benefit Policies During the COVID-19 Pandemic: Evidence from Ecuador (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:112738

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