PROSPER Study estimates 400 thousand new poor people and a 9% increase in inequality in Portugal due to Covid-19

Tuesday, June 22, 2021 - 10:33

Católica Lisbon School of Business & Economics PROSPER (Católica - Lisbon’s Center of Economics for Prosperity) in partnership with Fundacion La Caixa just released a study on how the COVID-19 affected the poverty and inequality in Portugal, as well as the mitigating element of the public policies of protection. 

What was the impact of COVID-19 pandemic in poverty and inequality in Portugal? What was the role of the extraordinary policies of protection in mitigating these effects of the crisis? According to a simulation of the annual income in with and without crisis scenarios, this study predicts a 25% increase of poverty (measured by poverty rate), even with the protection policies against the crisis implemented in 2020; and a 9% increase of inequality (measured by the ratio of 95- and 5-income percentiles) seen in the comparison of with and without crises scenarios. 

According to PROSPER, without the mitigating element of the public policies of protection, the initial 8-week confinement would have resulted approximately the same impact of poverty and inequality as the same estimated for one whole year. 

So, this study, released today, concluded that in Portugal there are currently more than 400 thousand poor people due to the pandemic. 

Still according to PROSPER, the Covid-19 pandemic is inevitable linked to the social and economic crisis. This study shows that the simplified lay-off regime of dependent employment workers, and the extraordinary support for freelancers were effective to mitigate the crisis impact. 

The ongoing pandemic and the resulting economic crisis brought substantial budget challenges; since the governmental efforts in large scale might be hard to sustain for a long period of time. In the light of these results, without a strong a recovery, a decrease of the protection policies could cause a substantial negative impact in poverty and inequality. 

For more information, please check the Study in here.

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