Have Social Distancing Measures Led to an Increase in Inequality in Latin America and The Carribean?

PhD candidate from the School of Economics Werner Pena has had a paper entitled ‘The Distributional Consequences of Social Distancing on Poverty and Labour Income Inequality in Latin America and the Caribbean’ accepted for publication in the Journal of Population Economics.

The paper co-authored by Werner Pena with Isaure Delaporte, former PhD student at Kent and now Research Fellow at St Andrews and Julia Escobar, Research Fellow at the Inter-American Development Bank estimates the potential distributional consequences of the first phase of the COVID-19 lockdowns on poverty and labour income inequality in 20 Latin American and Caribbean (LAC) countries. Social distancing measures have led to an increase in inequality both between and within countries.

“We estimate the share of individuals that are potentially able to remain active under the lockdown by taking into account individuals’ teleworking capacity but also whether their occupation is affected by legal workplace closures or mobility restrictions” Werner explained “Furthermore, we compare the shares under the formal (de jure) lockdown policies assuming perfect compliance with the shares under de facto lockdowns where there is some degree of non-compliance.”

“We then estimate individuals’ potential labour income losses and examine changes in poverty and labour income inequality. We find an increase in poverty and labour income inequality in most of the LAC countries due to social distancing; however, the observed changes are lower under de facto lockdowns, revealing the potential role of non-compliance as a coping strategy during the lockdowns. Lastly, we show that most of the dispersion in the labour income loss across countries is explained by the sectoral/occupational employment structure of the economies.”

This work has important policy implications in light of the context of the after pandemic in Latin America and the Caribbean. In terms of impact, Pena hopes that as poverty and inequality have increased due to the pandemic, this study will highlight the need to assist the most vulnerable workers.

 

The Distributional Consequences of Social Distancing on Poverty and Labour Income Inequality in Latin America and the Caribbean

Isaure Delaporte, Julia Escobar, Werner Pe˜na

Read the working paper in full here