2021-09-19-UNDP-Income_Support_Programs_and_COVID-19_in_Developing_Countries_28页_1mb

Income Support Programs and COVID-19 in Developing Countries

• Introduction: COVID-19 severely impacted labor markets in developing countries, leading to income loss and job insecurity. In response, governments implemented income support programs (ISPs) to mitigate economic fallout and help enforce social distancing measures, potentially reducing COVID-19 transmission.

• Methodology: The study analyzed 62 developing countries using weekly data on COVID-19 cases/deaths and ISP implementation from the Oxford COVID-19 Government Response Tracker (OxCGRT). It employed event studies and a difference-in-differences approach with country-week fixed effects, addressing staggered policy timing and potential pre-trends.

• Key Findings: ISPs reduced the weekly growth rate of COVID-19 cases and deaths, but effects varied by country income and labor informality. Middle-income countries and those with high informality saw stronger reductions, while low-income countries showed minimal effects, possibly due to insufficient support levels.

• Heterogeneity: ISPs’ impact on cases and deaths was significant in middle-income countries but not low-income ones. High informality levels, concentrated in low-income nations, constrained ISPs’ effectiveness in reducing case growth.

• Conclusion: ISPs were effective in reducing COVID-19 transmission growth but showed limitations in low-income settings. Policymakers must strengthen support generosity, targeting, and delivery methods to maximize benefits, especially during future health crises.