Higher inequality in Latin America: a collateral effect of the pandemic

This study explores the evolution of inequality in Latin America during the COVID-19 pandemic by using primary data from household and employment surveys collected in 2020. First, we discuss the trends in inequality in the region from 1992 to 2020. Next, we estimate regression models to examine how the changes in demographics and education levels might be correlated with changes in income distribution. Finally, we use a panel regression model with fixed effects for 16 countries in the region to identify how the socioeconomic context might help explain the changes in income inequality. The empirical findings suggest that inequality increased by a statistically significant 2% between 2019 and 2020. We obtained significantly heterogeneous results when disaggregating by gender, urban/rural location, and sector of economic activity. Remittances had a modest effect, while government transfers helped to prevent more significant disparities in half the countries studied. Our estimations show that the decline in employment levels–due to the economic contraction caused by COVID-19— is associated with increases in income inequality that might gradually diminish with the recovery. © 2023 Informa UK Limited, trading as Taylor & Francis Group.

Social effect of Covid-19: Estimates and alternatives for Latin America and the Caribbean

This document offers estimates of the possible changes in the social structure of the countries of Latin America derived from the consequent economic contraction from the Covid-19 pandemic, and explores the possible costs and benefits of different types of interventions to cushion its impact. The analysis forecasts that the number of people living in poverty (extreme and moderate) would increase by up to 44 thousand million people in the region. It also finds that the policy with the highest benefit-cost ratio is the postponement of payroll taxes and social security contributions. Other alternatives such as granting support to unemployed persons, temporarily doubling the benefits of existing social programs, and the transfer of income to self-employed workers also generate a favorable benefit-cost ratio, with differences among countries.