IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/9558.html
   My bibliography  Save this paper

Welfare and Distributional Impacts of Inflation and the COVID-19 Outbreak in the Islamic Republic of Iran

Author

Listed:
  • Rodriguez Takeuchi,Laura Kiku
  • Atamanov,Aziz

Abstract

This paper simulates the welfare and poverty impacts of the COVID-19 pandemic in the Islamic Republic of Iran, emphasizing the role of inflation, which lowered the purchasing power of households and had heterogeneous impacts across the distribution and in different regions of the country. First, income losses are estimated with a microsimulation analysis based on shock scenarios. Second, combining data on price changes with expenditure baskets for various groups of households, group-specific price indices are calculated. These are then applied to the post-shock income changes to assess the deterioration of living standards associated with inflation. Poverty substantially increases, by up to 21 percentage points, as a combined result of the fall in household incomes and high inflation through the pandemic. Iranians in the bottom half of the welfare distribution, those working in services and high-contact economic sectors, and those in rural areas are disproportionately affected.

Suggested Citation

  • Rodriguez Takeuchi,Laura Kiku & Atamanov,Aziz, 2021. "Welfare and Distributional Impacts of Inflation and the COVID-19 Outbreak in the Islamic Republic of Iran," Policy Research Working Paper Series 9558, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9558
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/288661614696489389/pdf/Welfare-and-Distributional-Impacts-of-Inflation-and-the-COVID-19-Outbreak-in-the-Islamic-Republic-of-Iran.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    2. Vu, Linh & Glewwe, Paul, 2011. "Impacts of Rising Food Prices on Poverty and Welfare in Vietnam," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(1), pages 1-14, April.
    3. World Bank, 2020. "Iran Economic Monitor, Spring 2020," World Bank Publications - Reports 34045, The World Bank Group.
    4. Harold Alderman & Christina H. Paxson, 1994. "Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries," International Economic Association Series, in: Edmar L. Bacha (ed.), Economics in a Changing World, chapter 3, pages 48-78, Palgrave Macmillan.
    5. Rafael E. de Hoyos & Denis Medvedev, 2011. "Poverty Effects of Higher Food Prices: A Global Perspective," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 387-402, August.
    6. Angus Deaton & Salman Zaidi, 2002. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," World Bank Publications, The World Bank, number 14101, April.
    7. Emmanuel Skoufias & Sailesh Tiwari & Hassan Zaman, 2012. "Crises, Food Prices, and the Income Elasticity of Micronutrients: Estimates from Indonesia," The World Bank Economic Review, World Bank, vol. 26(3), pages 415-442.
    8. Maho Hatayama & Mariana Viollaz & Hernan Winkler, 2020. "Jobs’ Amenability to Working from Home: Evidence from Skills Surveys for 53 Countries," CEDLAS, Working Papers 0263, CEDLAS, Universidad Nacional de La Plata.
    9. World Bank, 2020. "Iran Economic Monitor, Fall 2020," World Bank Publications - Reports 34973, The World Bank Group.
    10. Christopher B. Barrett & Paul A. Dorosh, 1996. "Farmers' Welfare and Changing Food Prices: Nonparametric Evidence from Rice in Madagascar," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 656-669.
    11. de Janvry, Alain & Sadoulet, Elisabeth, 2010. "The Global Food Crisis and Guatemala: What Crisis and for Whom?," World Development, Elsevier, vol. 38(9), pages 1328-1339, September.
    12. Dean Jolliffe & Espen Beer Prydz, 2016. "Estimating international poverty lines from comparable national thresholds," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 185-198, June.
    13. Kraay, Aart, 2007. "The welfare effects of a large depreciation : the case of Egypt, 2000-05," Policy Research Working Paper Series 4182, The World Bank.
    14. Rodriguez-Takeuchi, Laura & Imai, Katsushi S., 2013. "Food price surges and poverty in urban Colombia: New evidence from household survey data," Food Policy, Elsevier, vol. 43(C), pages 227-236.
    15. Jonathan Haughton & Shahidur R. Khandker, 2009. "Handbook on Poverty and Inequality," World Bank Publications - Books, The World Bank Group, number 11985.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Can, Zeynep Gizem & O'Donoghue, Cathal & Sologon, Denisa Maria & Smith, Darius & Griffin, Rosaleen & Murray, Una, 2023. "Modelling the Distributional Effects of the Cost-of-Living Crisis in Turkey and the South Caucasus: A Microsimulation Analysis," IZA Discussion Papers 16619, Institute of Labor Economics (IZA).
    2. Abdullah Kaviani Rad & Redmond R. Shamshiri & Hassan Azarm & Siva K. Balasundram & Muhammad Sultan, 2021. "Effects of the COVID-19 Pandemic on Food Security and Agriculture in Iran: A Survey," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    3. World Bank, 2021. "Iran Economic Monitor, Spring 2021," World Bank Publications - Reports 35741, The World Bank Group.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shinya TAKAMATSU, 2018. "Impacts of the Global Food Price Crisis on Household Welfare and Poverty in Lao PDR," GSICS Working Paper Series 33, Graduate School of International Cooperation Studies, Kobe University.
    2. World Bank, 2021. "Iran Economic Monitor, Spring 2021," World Bank Publications - Reports 35741, The World Bank Group.
    3. Ivanic, Maros & Martin, Will & Zaman, Hassan, 2012. "Estimating the Short-Run Poverty Impacts of the 2010–11 Surge in Food Prices," World Development, Elsevier, vol. 40(11), pages 2302-2317.
    4. Emily Schmidt & Rachel Gilbert & Brian Holtemeyer & Kristi Mahrt, 2021. "Poverty analysis in the lowlands of Papua New Guinea underscores climate vulnerability and need for income flexibility," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(1), pages 171-191, January.
    5. Christian Kagerl & Julia Starzetz, 2023. "Working from home for good? Lessons learned from the COVID-19 pandemic and what this means for the future of work," Journal of Business Economics, Springer, vol. 93(1), pages 229-265, January.
    6. Emiliano Magrini & Pierluigi Montalbano, 2012. "Trade openness and vulnerability to poverty: Vietnam in the long-run (1992-2008)," Working Paper Series 3512, Department of Economics, University of Sussex Business School.
    7. García-Germán, Sol & Romeo, Alessandro & Magrini, Emiliano & Balié, Jean, 2016. "The impact of food price shocks on weight loss: Evidence from the adult population of Tanzania," DARE Discussion Papers 1611, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    8. Negi, Digvijay S., 2022. "Global food price surge, in-kind transfers and household welfare: Evidence from India," World Development, Elsevier, vol. 158(C).
    9. McKay, Andy & Tarp, Finn, 2014. "Distributional impacts of the 2008 global food price spike in Vietnam," WIDER Working Paper Series 030, World Institute for Development Economic Research (UNU-WIDER).
    10. Pham Van Ha & Hoa Thi Minh Nguyen & Tom Kompas & Tuong Nhu Che & Bui Trinh, 2015. "Rice Production, Trade and the Poor: Regional Effects of Rice Export Policy on Households in Vietnam," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(2), pages 280-307, June.
    11. Verpoorten, Marijke & Arora, Abhimanyu & Stoop, Nik & Swinnen, Johan, 2013. "Self-reported food insecurity in Africa during the food price crisis," Food Policy, Elsevier, vol. 39(C), pages 51-63.
    12. Narayan,Ambar & Cojocaru,Alexandru & Agrawal,Sarthak & Bundervoet,Tom & Davalos,Maria Eugenia & Garcia,Natalia & Lakner,Christoph & Mahler,Daniel Gerszon & Montalva Talledo,Veronica Sonia & Ten,Andrey, 2022. "COVID-19 and Economic Inequality : Short-Term Impacts with Long-Term Consequences," Policy Research Working Paper Series 9902, The World Bank.
    13. Bruno Cheli & Achille Lemmi & Nicoletta Pannuzi & Andrea Regoli, 2019. "From the TFR to the IFR approach for the multidimensional analysis of poverty and living conditions," Discussion Papers 2019/252, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    14. Kugler, Maurice & Viollaz, Mariana & Duque, Daniel & Gaddis, Isis & Newhouse, David & Palacios-Lopez, Amparo & Weber, Michael, 2023. "How did the COVID-19 crisis affect different types of workers in the developing world?," World Development, Elsevier, vol. 170(C).
    15. Yamauchi, Futoshi & Larson, Donald F., 2019. "Long-term impacts of an unanticipated spike in food prices on child growth in Indonesia," World Development, Elsevier, vol. 113(C), pages 330-343.
    16. F. Clementi & A. L. Dabalen & V. Molini & F. Schettino, 2017. "When the Centre Cannot Hold: Patterns of Polarization in Nigeria," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 608-632, December.
    17. Burney, Jennifer A. & Naylor, Rosamond L., 2012. "Smallholder Irrigation as a Poverty Alleviation Tool in Sub-Saharan Africa," World Development, Elsevier, vol. 40(1), pages 110-123.
    18. Iqbal, Kazi & Tsubota, Kenmei & Shonchoy, Abu S & Hoque, Mainul, 2018. "Distributional impact of political violence : evidence from differential impacts on commodity price," IDE Discussion Papers 711, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Nora Lustig & Valentina Martinez Pabon & Federico Sanz & Stephen D Younger, 2023. "The Impact of COVID-19 on Living Standards: Addressing the Challenges of Nowcasting Unprecedented Macroeconomic Shocks with Scant Data and Uncharted Economic Behavior," International Journal of Microsimulation, International Microsimulation Association, vol. 16(1), pages 1-27.
    20. Cueva,Ronald & Del Carpio,Ximena Vanessa & Winkler,Hernan Jorge, 2021. "The Impacts of COVID-19 on Informal Labor Markets : Evidence from Peru," Policy Research Working Paper Series 9675, The World Bank.

    More about this item

    Keywords

    Inequality; Inflation; Employment and Unemployment; Health Care Services Industry;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wbk:wbrwps:9558. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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.