Now more than ever, it is key to appreciate the effects of economic shocks not just in income terms. New powerful evidence cements our understanding of a jaw-dropping fact: Pollak and Wolfe show that the lower families’ income, the smaller kids’ brain. The above image and graph speak volumes: there are 4 specific parts of the brain that are affected by child poverty – and the development of one of them, the frontal lobe, shows a marked different development trajectory for infants of low (blue line), middle (red) and high (green) income families. Bonus: a handy repository of child poverty country reports! Check out 87 country report nicely organized by region and collected by the Global Coalition to End Child Poverty and UNICEF (h/t Keetie Roelen).
The economic effects of the COVID-19 vary but are likely substantial – from $2.7 trillion in lost output to halving global growth. But how and through what mechanisms are these effects transmitted? Evans and Over lay out a great framework to assess the economic impact of COVID-19 in low- and middle-income countries. What features among the top three actions? “Strengthen the safety net”, including cash transfers and other measures to buffer the crisis.
Four materials on a particular form of cash transfers, UBI: my 5 lessons if using UBI as part of pandemic responses; while the Ontario quasi-UBI pilot was cancelled, 1,000 beneficiaries were still enrolled in the program and an evaluation was able to be conducted. What did it find? Monsebraaten reports that people didn’t quit work (see also Coelho’s summary); Widerquist has a YouTube lecture on the history of UBI; and Marinescu discusses UBI in the context of the US.
Among other crisis response measures, the UK is adapting its Universal Child Credit program to the crisis: the minimum income floor and requirements to physically attend a job center will be removed, with everything done on the phone and online. In the US, instead, Abbott indicates that SNAP’s time limits for able-bodied adults will tighten as of April 1 despite COVID-19 (tougher application of the 90-day limit on benefits is expected to end SNAP for 700,000 people) (h/t Jason Furman).
From US to LAC: Jairo et al show that in Colombia, the combined effect of taxes and social spending are overall progressive, while indirect taxes are regressive and contribute to an increase in inequality. Specifically, they estimate that the tax and transfers lead to poverty reduction between 0.3 and 2.6 percentage points for US$5.5 and US$3.2 per day per person respectively. Inequality instead is reduced by almost one Gini point.
From work requirements to labor and skills issues (with Indhira Santos and Michael Weber). So here are two big report: the IADB is publishing a report “bit by bit” on the Future of Work in Latin America and the Caribbean (see how LinkedIn data is used to create Labor Market GPSs). And an ILO report finds that young people with vocational training are more likely to be working in automatable occupations than those with university degrees.
How to turn the proverbial crisis (forced mobility) into opportunity? In Denmark, Nielsen Arendt et al show that children of refugees getting early language classes experienced higher employment (+ 4 percentage points), earnings ($2,500 in 18 years), completion of lower secondary school, and were less likely to engage in crime. Moving slightly south, Lorenz et al show that in Germany increasing retirement age and introducing pension deductions before normal retirement age did not prolong employment of older men.
Since I mentioned mobility, Tongtong et al find that over the fifteen-year period China’s internal migration costs fell by 45%, with the cost of moving from agricultural rural areas to non-agricultural urban ones falling even more.
What about gender? In Jordan, Viollaz and Winkler find that internet adoption increases female labor force participation; however, only older and skilled women experience an increase in employment. The internet also reduces the prevalence of gender-biased social norms, early marriage and fertility.
A final footnote on managing past crises: how old are informal risk sharing mechanisms and social networks? A PNAS study by Stewart et al on Lesotho reveals they date back at least 33,000 years (h/t Mattias Lundberg).