The Impact of COVID-19 on Living Standards: Addressing the Challenges of Nowcasting Unprecedented Macroeconomic Shocks with Scant Data and Uncharted Economic Behavior

We present a methodological approach with relatively low information requirements to quantify the impact of large, unprecedented macroeconomic shocks like the COVID-19 pandemic on living standards across the income distribution. The approach can be produced quickly and, contrary to other "fast-delivery" exercises, does not assume that income losses are proportional across the income distribution, a feature that is critical to understanding the impact on poverty and inequality. Our method is sufficiently flexible to refine the projected effects of the shock as more information becomes available. We illustrate with data from the four largest countries in Latin America: Argentina, Brazil, Colombia, and Mexico, and discuss the estimated effect of COVID-19 on inequality and poverty. We also present the guidelines for adapting our framework to different countries and economic shocks © 2023, Lustig et al

The impact of COVID-19 lockdowns and expanded social assistance on inequality, poverty and mobility in Argentina, Brazil, Colombia and Mexico

Based on the economic sector in which household members work, we use microsimulation to estimate the distributional consequences of COVID-19-induced lockdown policies in Argentina, Brazil, Colombia and Mexico. Our estimates of the poverty consequences are worse than many others' projections because we do not assume that the income losses are proportionally equal across the income distribution. We also simulate the effects of most of the expanded social assistance governments have introduced in response to the crisis. This has a large offsetting effect in Brazil and Argentina, much less in Colombia. In Mexico, there has been no such expansion. Contrary to prior expectations, we find that the worst effects are not on the poorest, but those (roughly) in the middle of the ex ante income distribution. In Brazil, we find that poverty among the afrodescendants and indigenous populations increases by more than for whites, but the offsetting effects of expanded social assistance also are larger for the former. In Mexico, the crisis induces significantly less poverty among the indigenous population than it does for the nonindigenous one. In all countries the increase in poverty induced by the lockdown is similar for male- and female-headed households but the offsetting effect of expanded social assistance is greater for female-headed households.