Open AccessFrom bad to worse: The economic impact of COVID-19 in developing countries. Evidence from Venezuela
Author(s) -
Germán Daniel Caruso,
Lautaro Chittaro,
Maria Emilia Cucagna,
Luis Pedro Espana
Publication year - 2021
Publication title -
latin american economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.391
H-Index - 8
eISSN - 2198-3526
pISSN - 2196-436X
DOI - 10.47872/laer.v30.38
Subject(s) - covid-19 , developing country , economics , exploit , phone , quarantine , identification (biology) , economic impact analysis , informal sector , demographic economics , development economics , business , economic growth , medicine , ecology , linguistics , philosophy , botany , computer security , disease , pathology , computer science , infectious disease (medical specialty) , biology , microeconomics
Policy responses to COVID-19 affected the dynamic of eco¬nomic growth and labor markets worldwide, hitting econom¬ically harder on developing countries. These policies involved economic lockdowns that included the shutdown of the main statistical exercises, making it almost impossible to assess the breadth and variety of their effects. Using a phone survey, this paper examines the impact of the quarantine implemented in Venezuela on labor market outcomes. The identification strategy exploits the exogenous variation in the severity of the lockdown in different regions of the country. The main result indicates a 16.5 percentage points reduction in employment, while in regions with severe lockdowns the reduction has been 13.8 p.p. larger. In particular, the self-employed and informal¬ly employed were hard hit by the lockdown. To cope with this effect, households sold their productive assets, reduced their savings, sought for alternative income sources and looked for help from relatives. This paper does not find a differential ef¬fect on the number of COVID-19 cases in more severe lock¬down settings. Results are robust to endogenous migration and alternative specifications.