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Short and Long-Run Distributional Impacts of COVID-19 in Latin America

Nora Lustig (), Valentina Martinez Pabon (), Guido Neidhöfer () and Mariano Tommasi ()
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Valentina Martinez Pabon: Tulane University

No 2013, Working Papers from Tulane University, Department of Economics

Abstract: We simulate the short- and long-term distributional consequences of COVID-19 in the four largest Latin American economies: Argentina, Brazil, Colombia and Mexico. We show that the short- term impact on income inequality and poverty can be very significant, but that additional spending on social assistance more than offsets the effect in Brazil. The offsetting effect is significant in Argentina and Colombia, and nil in Mexico where there has been no such expansion. We find that a universal basic income that would have produced the same reduction in the poverty gap as actual policies would have cost slightly more but would have benefited the poor (the nonpoor) slightly less (more). To project the long-term consequences, we estimate the impact of the pandemic on school achievement and its intergenerational persistence. We use information on school closures, educational mitigation policies, and account for educational losses related to health shocks and parental job loss. Our findings show that in all four countries the impact is strongly asymmetric and affects particularly the high-school completion rates of children from disadvantaged families. Our simulations suggest that mitigation policies seem to have a minor impact on containing these negative effects.

Keywords: COVID-19; Lockdowns; Inequality; Poverty; Human capital; School closures; Social spending; Intergenerational persistence; Latin America; Argentina; Brazil; Colombia; Mexico. (search for similar items in EconPapers)
JEL-codes: C63 D31 I24 I32 I38 J62 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-edu, nep-lab, nep-lam and nep-ltv
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