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The role of automatic stabilizers and emergency tax–benefit policies during the COVID-19 Pandemic: evidence from Ecuador

Jara, H. Xavier, Montesdeoca, Lourdes and Tasseva, Iva ORCID: 0000-0003-3302-8918 (2021) The role of automatic stabilizers and emergency tax–benefit policies during the COVID-19 Pandemic: evidence from Ecuador. European Journal of Development Research. ISSN 0957-8811

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Identification Number: 10.1057/s41287-021-00490-1

Abstract

By combining household survey data before and during the COVID-19 pandemic with detailed tax-benefit simulations, this paper quantifies the distributional effects of COVID-19 in Ecuador and the role of tax–benefit policies in mitigating the immediate impact of the economic shocks. Our results show a dramatic increase in income poverty and inequality between December 2019 and June 2020, the period when the economy was hit the hardest. The national poverty headcount increases from 25.7 to 58.2%, the extreme poverty headcount from 9.2 to 38.6%, and the Gini coefficient from 0.461 to 0.592. On average, household disposable income drops by 41%. The new Family Protection Grant provides income protection for the poorest income decile. However, overall tax–benefit policies do little to mitigate the losses in household incomes due to the pandemic. Informal workers, in particular, are left unprotected due to the lack of income support in the event of unemployment.

Item Type: Article
Official URL: https://www.palgrave.com/gp/journal/41287
Additional Information: © 2021 European Association of Development Research and Training Institutes (EADI).
Divisions: Social Policy
Subjects: H Social Sciences > HJ Public Finance
H Social Sciences > HC Economic History and Conditions
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
Date Deposited: 25 Nov 2021 12:00
Last Modified: 25 Nov 2021 12:00
URI: http://eprints.lse.ac.uk/id/eprint/112738

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