Precrisis Situation: Poverty and Labor Markets

(computable general equilibrium) modeling and focus mostly on the macroeconomic impact of the pandemic.

We rely on the latest round of data available in the 2015 national household budget survey. The Household Budget Survey is a quinquennial survey and the eighth survey of its kind carried out by the National Institute of Statistics (INS). The seven preceding surveys were carried out in 1968, 1975, 1980, 1985, 1990, 1995, and 2005. The survey, which covers the budget, consumption, and household standard of living in 2015, covers data on household expenditures and acquisitions during the survey period, food consumption and the nutritional situation of households, and household access to community health and education services. Although the INS has conducted a 2019 household budget survey, the official estimates are not yet published, and the data are not yet widely available and do not include consumption data.

This chapter begins with a comprehensive description of Tunisia’s precrisis situation, including trends in poverty, labor markets, and demographics. It then describes the data and the empirical methodology to simulate the impacts of COVID-19 on labor income and consumption, along with the magnitude of impacts in the presence of mitigation measures. It concludes with key findings and policy implications.

Precrisis Situation: Poverty and Labor Markets

Which population subgroups are most vulnerable to getting infected by COVID-19 and most heavily affected by the associated government mitigation measures? In the pre-COVID period, the poverty headcount rate in Tunisia declined—from 25.4 percent in 2000 to 13.8 percent in 2019 (figure 6.2, panel a). The pace of poverty reduction was fastest between 2010 and 2015. A thorough examination of trends in inequality shows a similar pattern. Particularly from 2005 onward, the Gini index fell from 0.40 in 2000 to 0.37 in 2015, and further to 0.33 in 2019. Urban areas registered a higher Gini index, but between 2015 and 2019 the gap between the Gini index in urban and rural areas seemed to be declining.

Overall, economic growth has been pro-poor, with the bottom 40 percent benefiting the most. Figure 6.2, panel b, shows Tunisia’s growth incidence curve (GIC), which displays the annualized increase in consumption per capita by percentage of the consumption distribution (the left side of the horizontal axis is the poorest and the right side is the richest). It shows that the poorest experienced the largest percentage increase in consumption, and that the increase declines as one moves