Covid: inequality shock in Argentina and Rosario

What the labor market data shows during the pandemic in Argentina and Greater Rosario: activity, unemployment, education, income and inequality in 2020. October 2020 report.

The protective measures against the pandemic have negatively impacted the level of economic activity and associated social indicators. Since April, the debate about whether a negative economic shock would occur quickly ceased to be a relevant discussion and became a meaningless anecdote.

In any case, and given the inevitability of the effects, the issues that really matter became: how deeply does this shock impact, what sectors of the population will be the most affected, what will be the perseverance of its consequences, what was the trajectory of the country and, above all, what to do.

What does the report analyze and what data does it use?

The report accompanying this article analyzes the data from the first quarter of 2020 provided by the EPH (Permanent Household Survey). It is complemented by the technical report "Labor Market. Rates and Socioeconomic Indicators (EPH)," which provides information from the second quarter of 2020. This report anticipates a significant drop in activity in the labor market, especially in the Greater Rosario metropolitan area.

This project is based on the belief that having a complete and unbiased overview of a set of socio-economic indicators for Rosario and Argentina will improve the public debate on the effects of the pandemic. These effects will be fully reflected in the publication of the microdata database for the second quarter of 2020, scheduled for November 6th.

So, what can you expect from a 2020 report on the labor market and social indicators? The report presents an analysis of four main points: activity and employment, education level, income, and measures of inequality, both for all urban areas and for Greater Rosario. This article summarizes the main ideas.

📄 Download the report (PDF)

Activity and employment

The set of indicators related to the composition of Argentina's economically active population reveals a highly precarious situation. The open unemployment rate reached 13,1% in the second quarter of 2020. This represents an increase of 2,4 percentage points compared to 2019.

The discouragement effect impacts the overall activity rate. In the second quarter of 2020, this rate decreased by 9,3 percentage points compared to the same period in 2019, reaching 38,4%. A year-on-year drop in labor market pressure of 3,1 percentage points was also recorded. In the Greater Buenos Aires metropolitan area (AGR), the activity rate fell by 16,2 percentage points year-on-year. Even so, the rate remains at 43%, higher than the average for all urban areas.

Economically active population by group and pressure on the labor market, total agglomerations, Q1 and Q2 2019-2020

education level

In Argentina, lockdown measures have severely impacted the education system's ability to respond to the needs of its target population. They have also affected families' ability to access available solutions.

The results will undoubtedly be varied, but with a bias in favor of families with greater income capacity and, therefore, better access to remote education for young family members. In other words, if education is usually considered a means of upward social mobility, this year's results will most likely have the opposite effect.

The data shows that higher levels of formal education are associated with greater likelihood of being employed and working. Furthermore, there is a lower chance of being unemployed or seeking better employment opportunities. At the same time, there is a greater likelihood of having formal and public sector employment.

In Argentina, the proportion of the urban population over 17 years of age with a low level of education is 40,2%. At the other extreme, the proportion of the population with completed university studies (or higher) is 10,44%. Meanwhile, in the AGR (Area of ​​Greater Buenos Aires), the population with a low level of education reaches 43,07%. The AGR has, in relative terms, a larger proportion of young people. Therefore, everything seems to indicate that the problems of first-time employment and youth employment will worsen during and after the pandemic.

Employment rate by educational level, from no schooling to university graduate, in percentage

Revenue

In Argentina, the average real family income has fallen by more than 15% in just three years. In nominal terms, the average family income in the first quarter of 2020 reached approximately $60.000. This amount is enough to cover the purchase of 1,42 total basic food baskets.

Existing gender differences translate into differences in average individual income between men and women. In Argentina, the largest gaps occurred in even-numbered quarters, reaching a maximum of 50%. However, the first quarter of 2020 saw the smallest gap at 33%, due to a decrease in income reported by men and an increase in income reported by women.

Average income from main occupation for men and women, from 2016 to 2020

Measures of inequality

The Gini coefficient will be used to measure income distribution. This indicator is based on the Lorenz Curve and takes values ​​between 0 and 1. A value of 0 would mean that the society has achieved a level of absolute equality. A value of 1, on the other hand, should be interpreted as meaning that a single person receives all the income.

For the first quarter of 2020, income distribution in the AGR (Greater Greater Buenos Aires) shows a Gini coefficient of 0,4105, while the total for all urban agglomerations reports 0,441. In the Lorenz Curve, although not readily apparent in the graph, at the lowest levels of cumulative population, the national aggregate is more equitable. For example, the 20% of people with the lowest income levels accumulate 4,35% of total national income, but only 4,23% in the AGR.

As a greater amount of population accumulates (for example, at 80%), the Lorenz curves of Argentina and AGR tend to separate, showing that the greatest differentiation occurs due to high incomes.

Lorenz curve of income for all urban agglomerations and Greater Rosario versus the equality line

Conclusions

The pandemic caused a negative and asymmetrical shock, affecting vulnerable people the most, but also young people. Unlike the other groups mentioned in the report, this appears to be a segment with low political representation and, therefore, low bargaining power.

One of the points that seems practically absent from the agenda for the first half of the year is the consequences of closing educational establishments at all levels as a preventative measure. To date, health considerations have taken precedence over socio-economic ones. The conditions prior to the greatest impact of the pandemic show that the starting point was already compromised in terms of activity, employment, and income.

The reactivation will come in the future. But in the future, if the effects persist, younger people will have fewer tools at their disposal.

Open access, for use and citation

The report is available freely and without charge, under a Creative Commons license (CC BY-NC-SA 4.0):

Primeras gotas: Indicadores socio-económicos para AGR y Argentina. Informes del Observatorio UNR N.º 52 — Serie Informes de Coyuntura N.º 18, octubre de 2020. ISSN 2683-9067 / 2683-9075. Autores: Germán A. Tessmer, Lucia Papa, Luciano A. Jara Musuruana, Diego Marfetán Molina y Patricio H. Almeida Gentile.