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The Impact of COVID-19 Economic Shock on Inequality and Poverty in Mexico

Author

Listed:
  • Nora Lustig

    (Tulane University and Commitment to Equity Institute)

  • Valentina Martinez Pabon

    (Tulane University)

Abstract
Based on the economic sector in which household members work, we use microsimulation to estimate the distributional consequences of the COVID-19 pandemic in Mexico. Although the predicted increase in poverty is significant, we find that the worst effects may not be on the poorest, but those (roughly) in the middle deciles of the ex ante income distribution: the moderate poor and those vulnerable to falling below the poverty line if subject to an adverse shock. We estimate that the economic shock could induce significantly less increase in poverty in rural areas and among the indigenous population. The increase in poverty seems to be similar for male- and female-headed households. Compared to other countries, Mexico stands out because of the absence of mitigation policies. In contrast, in Argentina and Brazil, the expanded social assistance seems to significantly offset the impact of the economic dislocation.

Suggested Citation

  • Nora Lustig & Valentina Martinez Pabon, 2020. "The Impact of COVID-19 Economic Shock on Inequality and Poverty in Mexico," Working Papers 2014, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:2014
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    File URL: http://repec.tulane.edu/RePEc/pdf/tul2014.pdf
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    References listed on IDEAS

    as
    1. François Bourguignon, 2011. "Status Quo In The Welfare Analysis Of Tax Reforms," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 603-621, December.
    2. -, 2020. "Addressing the growing impact of COVID-19 with a view to reactivation with equality: New projections," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 45784 edited by Cepal.
    3. Nicolas Bottan & Bridget Hoffmann & Diego Vera-Cossio, 2020. "The unequal impact of the coronavirus pandemic: Evidence from seventeen developing countries," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-10, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Gonzalo Gomez Bengoechea, 2021. "The impact of the COVID-19 crisis on income distribution under different protection schemes: the case of Spain," Public Sector Economics, Institute of Public Finance, vol. 45(4), pages 517-541.

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    More about this item

    Keywords

    COVID-19; Inequality; Poverty; Mobility; Microsimulations; Latin America; Mexico.;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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