Poverty during Covid-19 in North Macedonia: Analysis of the distributional impact of the crisis and government response

Abstract: In this paper we simulate the poverty effect of the Covid-19 pandemic in North Macedonia and we analyze the income-saving power of three key government measures: the employment-retention scheme, the relaxed Guaranteed Minimum Income support, and one-off cash allowances. In this attempt, the counterfactual scenarios are simulated by using MK-MOD, the Macedonian Tax and Benefit Microsimulation Model, incorporating actual data on the shock-s magnitude from the second quarter of 2020. The results suggest that without the government interventions, of the country-s two million citizens, an additional 120,000 people would have been pushed into poverty by COVID-19, where 340,000 were already poor before the pandemic. Of the 120,000 newly poor about 16,000 would have been pushed into destitute poverty. The government-s automatic stabilizers worked to shield the poorest people, though these were clearly pro-feminine. In all, the analyzed government measures recovered more than half of the income loss, which curbed the poverty-increasing effect and pulled an additional 34,000 people out of extreme poverty. The employment-retention measure was regressive and pro-masculine; the Guaranteed Minimum Income relaxation (including automatic stabilizers) was progressive and pro-feminine; and the one-off support has been pro-youth.