IDEAS home Printed from https://ideas.repec.org/a/bla/rdevec/v29y2025i1p226-246.html
   My bibliography  Save this article

Assessing the role of tax‐benefit policies during the COVID‐19 pandemic: Evidence from the Andean region

Author

Listed:
  • H. Xavier Jara
  • David Rodríguez
  • Diego Collado
  • Javier Torres
  • Andrés Mideros
  • Lourdes Montesdeoca
  • Andrés Avellaneda
  • Rodrigo Chang
  • Omar Vanegas

Abstract

This paper aims to assess the role of tax‐benefit policies in mitigating the effects of COVID‐19 on the distribution of household disposable income in Colombia, Ecuador, and Peru. We exploit data from phone surveys collected during the pandemic combined with tax‐benefit microsimulation techniques to nowcast the distribution of household disposable income. Our results show a sharp drop in household disposable income and a dramatic increase in poverty and inequality during the second quarter of 2020. By the end of 2020, the economy recovers but poverty and inequality remain above the pre‐pandemic levels. COVID‐related policies cushion the effect of the crisis at the bottom of the distribution, and their effect on poverty and inequality largely depends on the generosity of the benefits implemented. By contrast, automatic stabilizers mitigate the impact of the income shock at the top of the distribution due to the effect of social insurance contributions and personal income tax, whereas social assistance programs in place before the pandemic fail to act as automatic stabilizers due to their design as proxy means‐tested benefits. We validate our nowcasting estimates with actual survey data from the end of 2020 and show that our results match closely poverty and inequality indicators in all three countries.

Suggested Citation

  • H. Xavier Jara & David Rodríguez & Diego Collado & Javier Torres & Andrés Mideros & Lourdes Montesdeoca & Andrés Avellaneda & Rodrigo Chang & Omar Vanegas, 2025. "Assessing the role of tax‐benefit policies during the COVID‐19 pandemic: Evidence from the Andean region," Review of Development Economics, Wiley Blackwell, vol. 29(1), pages 226-246, February.
  • Handle: RePEc:bla:rdevec:v:29:y:2025:i:1:p:226-246
    DOI: 10.1111/rode.13125
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rode.13125
    Download Restriction: no

    File URL: https://libkey.io/10.1111/rode.13125?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:29:y:2025:i:1:p:226-246. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.