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Title: Slums and Pandemics

Author(s): Luiz Brotherhood, Tiago Cavalcanti, Daniel Da Mata and Cezar Santos

Publication Date: August 2020

Keyword(s): COVID-19, health, Public Policies, Slums and Social distancing

Programme Area(s): Development Economics and Macroeconomics and Growth

Abstract: This paper studies the role of slums in shaping the economic and health dynamics of pandemics. Using data from millions of mobile phones in Brazil, an event-study analysis shows that residents of overcrowded slums engaged in less social distancing after the outbreak of Covid-19. We develop a choice-theoretic equilibrium model in which poorer agents live in high-density slums and others do not. The model is calibrated to Rio de Janeiro. Slum dwellers account for a disproportionately high number of infections and deaths. In a counterfactual scenario without slums, deaths fall overall but increase in non-slum neighborhoods. Policy simulations indicate that: reallocating medical resources cuts deaths and raises output and the welfare of both groups; mild lockdowns favor slum individuals by mitigating the demand for hospital beds whereas strict confinements mostly delay the evolution of the pandemic; and cash transfers benefit slum residents in detriment of others, highlighting important distributional effects.

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Bibliographic Reference

Brotherhood, L, Cavalcanti, T, Da Mata, D and Santos, C. 2020. 'Slums and Pandemics'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15131