Distributed in Key Transmission Channels

FIGURE 4.2

Households’ Welfare Received Short-Term Impacts Distributed in Key Transmission Channels

Labor income

• Lost earnings due to illness or to the need to attend sick family members • Lost/reduced earnings due to job losses and reduced working hours among wage workers (formal and informal) • Lost income among self-employed

Nonlabor income

• International remittances • Domestic remittances

Prices

• Price increase of basic essentials • Shortage/rationing of basic essentials • Out-of-pocket cost of health care services • Decrease in prices of oil and other commodities

Access to services

• Disruption in access to education (retention, learning, nutrition) • Disruption in access to health (saturation of health system)

make ends meet. Private sector firms can experience a major shock in a pandemic. On the supply side, the lockdown and restrictions on mobility can close businesses completely and create difficulties in accessing labor and other inputs. On the demand side, lower incomes can reduce consumption to essential basic needs. Further, if enterprises lack support from banks and are unable to benefit from government assistance during the pandemic, they can experience financial distress. And limited mobility and the unavailability of home-based work, especially for low-skilled workers performing tasks that cannot be done remotely, can translate into job losses, reduced earnings, and lower living standards.

• Nonlabor income. Other income sources, such as public and private transfers, can be affected. Lower levels of international (and domestic) remittances are a by-product of economic contraction in countries and regions where emigrants are working. In countries with limited fiscal space, any reduction in the volume of public transfers, or in the size of the target populations after an economic downturn, can contribute to lower living standards. However, public transfers could be increased after an economic downturn, thereby helping to mitigate the impact of a crisis.

• Prices. Changes in prices or shortages of basic food items and medicines, caused by disruptions in international and national supply chains