Article
The Impact of Covid-19 on Poverty and Inequality in Portugal and the Cushioning Effect of Policies
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1The crisis prompted by the Covid-19 pandemic resulted in substantial income loss for the Portuguese population. The annual median equivalised income, adjusted for household size and composition, dropped from €10,100 in the no-crisis scenario to €9,100 in the crisis scenario. The average simulated income loss was 7% of yearly income.
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2Compared to the no-crisis scenario, 400,000 new individuals fell below the poverty line, defined as 60% of the median equivalised income, increasing the at-risk-of-poverty (AROP) rate by 25% as a result of the covid-19 pandemic.
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3With the biggest losers already in the bottom half of the income distribution, the crisis increased inequality: the ratio between the 95th and 5th income percentiles rose by more than 9% when comparing crisis and no-crisis scenarios.
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4The crisis had asymmetric effects. The lower and lower-middle classes, the Algarve region and people with only a 9th grade education were the biggest losers from this crisis, with losses clearly above the national average.
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5The policies enacted by the Portuguese government in 2020 managed to partly mitigate the rise of poverty and inequality. Without these extraordinary programmes, just the initial 8-week lockdown would have had about the same impact on poverty and inequality as estimated for an entire year.
