A microsimulation study of COVID-19‘s impact on household welfare in Ethiopia

Abstract

ABSTRACT Our study aims to analyze and learn from the unanticipated economic shocks caused by the COVID-19 pandemic. We examine the ramifications of the pandemic on household well-being in Ethiopia, uncovering the layers of socio-economic impact through a rigorous microsimulation exercise. Drawing on robust data from the 2018/19 Living Standards Measurement Study – Integrated Surveys on Agriculture, we assess the significant disruptions caused by the pandemic. Our findings reveal a 2 to 4 percentage point increase in the poverty rate within the first three months, driven largely by shifts in direct incomes and food prices. The analysis highlights differential impacts across rural and urban areas, as well as between male- and female-headed households. Moreover, the study underscores the vital role of social protection programs in mitigating the effects of such shocks.