Poverty and income distribution incidence of the COVID-19 outbreak: investigating socially responsible policy alternatives for Turkey

Abstract

The COVID-19 pandemic is being experienced as a multidimensional systemic crisis based on the simultaneous manifestations of the supply, demand, and financial shocks. These effects have already been realized in the exacerbation of deep inequalities in income distribution, in functional, regional, and gender terms; and therefore, in an environment where poverty is experienced with social exclusion due to severe inequalities of income. Within that context, this article has three interrelated objectives. First, we measure the macroeconomic impacts of COVID-19 for the Turkish economy through a general equilibrium model designed for this purpose. Second, we evaluate the effects of the crisis and the implemented policies thus far on poverty and income distribution. We find that in an optimistic scenario, Covid-19 would have increased poverty rate from 13.5 to 20%, and that government policies, at best, limited the increase in poverty to 18%. These policies also reduced the Gini coefficient by one percent at best. Finally, we propose more effective policy alternatives to mitigate the impacts of COVID-19 crisis on the Turkish economy which are compatible with public budget constraints.

Toward a green income support policy: investigating social and fiscal alternatives for Turkey

“…The existing social protection systems failed to provide protection to those who are in need in rapidly evolving dire situations like the COVID-19 pandemic 1 . Both existing research on social protection against climate change (Aleksandrova 2020) as well as recent COVID-19 experience (Busso et al, 2021; Gerard et al 2020; Tekgüç et al 2022) point out the need for building social safety nets with a broad coverage. To ensure that social protection is incorporated in climate change mitigation, social safety nets must be able to rapidly respond to shocks, to be scalable and adaptable with broad coverage.…”