Impact of private and public initiatives on individuals' employment and income during the COVID-19 pandemic: evidence from Peru

Abstract

Purpose The purpose of this paper is to determine the impact of private and public initiatives (financial literacy, entrepreneurship, remote work and government aid) on individual job loss and decrease in income during the COVID-19 pandemic in Peru.Design/methodology/approach The authors used an unbalanced panel data analysis with the National Household Survey for 2019–2020. The hypotheses are tested with a probit panel data model since the dependent variables are binary.FindingsThe study findings indicate that financial preparedness reduced the probability of having a decrease in income, but only to informal workers in metropolitan Lima. Furthermore, entrepreneurship helped mainly female informal workers to reduce their probability of becoming unemployed in metropolitan Lima. Besides, the implementation of remote work as a substitute of face-to-face work was not enough to avoid the decrease in income in the case of informal workers and it was only effective to avoid unemployment in the case of formal workers in metropolitan Lima. Finally, public aid proved to be instrumental in mitigating the decrease in income, but only to informal workers in Metropolitan Lima.Research limitations/implications The study results only apply for the first year of the pandemic.Practical implicationsPolicymakers should focus on increasing the financial preparedness of informal workers, especially in provinces.Social implicationsPolicymakers must expand unemployment benefits, and design public aid programs targeting informal workers in provinces.Originality/valueThis is the first study that analyses the impact of private and public initiatives on the decrease in income and unemployment situation of Peruvian individuals during the outbreak of the COVID-19 pandemic.

Editorial: 57th issue of the Journal of Economics, Finance and Administrative Science

“…A research conducted in metropolitan Lima by Mongrut et al . (2024) suggests that being financially prepared decreased the likelihood of income decline, albeit solely among informal workers.…”

“…This study also offers pertinent policy insights for investors and portfolio managers.Based on the findings of Alam et al (2024), credit risk emerges as a primary barrier hindering South Asian Association of Regional Cooperation (SAARC) economies' ability to attract increased inbound foreign direct investment (FDI) from external sources. The recipient economy's financial sector is anticipated to directly impact FDI by offering external funding to bolster the capabilities of foreign subsidiaries.A research conducted in metropolitan Lima by Mongrut et al (2024) suggests that being financially prepared decreased the likelihood of income decline, albeit solely among informal workers. Additionally, entrepreneurship primarily aided female informal workers to diminish their risk of unemployment.…”

“…A research conducted in metropolitan Lima by Mongrut et al (2024) suggests that being financially prepared decreased the likelihood of income decline, albeit solely among informal workers. Additionally, entrepreneurship primarily aided female informal workers to diminish their risk of unemployment.…”