He nández-Solano, Alan; López-López, Jhai ; Yúnez-Naude, An onio; Go ea-Va gas,
Ya zi y
A icle
Socioeconomic e ec s o COVID-19 in Mexico: A
mul isec o al app oach and policy op ions
La in Ame ican Economic Re iew
P o ided in Coope a ion wi h:
Cen o de In es igación y Docencia Económica (CIDE), Mexico Ci y
Sugges ed Ci a ion: He nández-Solano, Alan; López-López, Jhai ; Yúnez-Naude, An onio; Go ea-
Va gas, Ya zi y (2022) : Socioeconomic e ec s o COVID-19 in Mexico: A mul isec o al app oach
and policy op ions, La in Ame ican Economic Re iew, ISSN 2196-436X, Cen o de In es igación y
Docencia Económica (CIDE), Ciudad de México, Vol. 31, Iss. 1, pp. 1-20,
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La in Ame ican Economic Re iew
Open Access
RESEARCH ARTICLE
He nández-Solano, e al., La Am Econ Re (2022) 31:1
h ps://doi.o g/10.47872/lae . 31.67
Special Issue: COVID-19 in La in Ame ica
Socioeconomic E ec s o COVID-19 in
Mexico: A Mul isec o al App oach and
Policy Op ions
Alan He nández-Solano1, Jhai López-
López2, An onio Yúnez-Naude3,
Ya zi y Go ea-Va gas4
1 Ins i u o de In es igaciones pa a el Desa -
ollo con Equidad-Uni e sidad Ibe oame -
icana, Mexico; e-mail: alan20mhs@gmail.
com
2 Co esponding au ho : Na ional Resea ch
Sys em g an ee, Mexico; Tel: +52 1 55 4357
6218, e-mail: jhai [email p o ec ed]
3 El Colegio de Mexico, Ca e e a Pica-
cho-Ajusco 20, Col. Ampliación Fuen es del
Ped egal 14110, Mexico; e-mail: ayunez@
colmex.mx
4 P ojec esea che a El Colegio de México,
Ca e e a Picacho-Ajusco 20, Col. Amplia-
ción Fuen es del Ped egal 14110, Mexico;
e-mail: [email p o ec ed]
Abs ac
The heal h c isis caused by he sp ead o COVID-19 has
caused a p o ound social and economic dis up ion in Mexico.
Ou pu pose in his pape is o con ibu e o he knowledge
abou he economic impac o he pandemic in Mexico and o
e alua e social policy op ions o mi iga e i s e ec s. We do so
based on a mul isec o al-mul iplie model and he mos ecen
Social Accoun ing Ma ix o Mexico, wi h which we es ima e
he di ec and indi ec impac s o COVID-19 as well he likely
e ec s o wo al e na i es o mi iga ing hem: an uncondi ion-
al cash ans e scheme o households li ing in po e y, and
he es ablishmen o an unemploymen insu ance p og am o
wo ke s who ha e los hei jobs du ing he pandemic. We ind
ha he i s al e na i e alle ia es mo e alue added and loss
o income, and hus has a g ea e e ec in educing inequali y
and he incidence o po e y.
Keywo ds: COVID-19 pandemic, Economywide im-
pac s, Social policies, Income dis ibu ion, Po e y
JEL Classi ica ion: C63, H12, P36, P43
Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
2/20
In oduc ion
The COVID-19 pandemic caused by he SARS CoV-2 i us has been an unexpec ed e en a -
ec ing economies a ound he wo ld wi h di e en iming and deg ees o se e i y. As o Augus
10, 2021, he e ha e been 203,295,170 con i med cases o COVID-19, including 4,303,515
dea hs, wo ldwide. Mexico has been one o he coun ies ha des hi by he pandemic: in Au-
gus 2021, i epo ed 2,971,817 cumula i e cases and 244,420 cumula i e dea hs o he Wo ld
Heal h O ganiza ion (WHO), occupying ou h place, behind he Uni ed S a es, B azil, and
India (WHO Heal h Eme gency Dashboa d, 2021).
Go e nmen s a ound he wo ld ha e implemen ed ac ions o mi iga e he sp ead o he
i us, such as lockdowns on “non-essen ial” ac i i ies and social dis ancing measu es. These e-
sponses, oge he wi h he heal h consequences o COVID-19, ha e caused a global economic
ecession, a ise in he incidence o po e y, and changes in income dis ibu ion.1
In addi ion o being one o he coun ies mos a ec ed by he pandemic, Mexico is one
o he mos unequal among middle income coun ies, and has no signi ican ly educed i s
incidence o po e y. The Mexican go e nmen has ocused mainly on policies o mi iga e he
e ec s o he pandemic on people li ing in po e y and i has no p o ided aid o highe income
g oups o o businesses. Ou s udy conside s his ea u e o cu en policy and con ibu es o
he e alua ion o he e ec s o social policy aimed a mi iga ing he e ec s o he pandemic in
middle-income coun ies.
In his pape we p esen he main esul s o ou es ima ion o he di ec and indi ec mul i-
plie e ec s o COVID-19 on alue added, po e y, and income inequali y in Mexico. We also
p esen esul s o ou es ima ions o he likely impac o wo al e na i es o mi iga e he eco-
nomic consequences o he pandemic: a cash ans e p og am o households li ing in po e y
be o e he c isis ( he cu en Mexican go e nmen policy), and an unemploymen insu ance
p og am o wo ke s who lose hei jobs du ing he pandemic.
We use an applied mul iplie model based on a Social Accoun ing Ma ix (SAM) o Mexico
o he yea 2018 (SAM-MEX). This ma ix is he mos ecen one cons uc ed by he Na ional
Ins i u e o S a is ics, Geog aphy, and In o ma ics (INEGI).2 A SAM is an economy-wide da a-
se ha cap u es in o ma ion om a speci ic economic sys em, such as a coun y. I includes he
economic lows o all ansac ions aking place o e a speci ic pe iod o ime, usually a yea . In
gene al, SAMs include p oduc i e ac i i ies, p i a e and public ins i u ions, and in e ac ions
wi h he es o he wo ld, including in e ac ions h ough commodi y and ac o ma ke s. Mul-
iplie models use SAMs o cap u e he ela ionships o ou pu , ac o demand, and income, and
o sepa a e he e ec s o hese ela ionships.
Based on he li e a u e ela ed o mul isec o al models,3 we conside ha SAM-based mul i-
plie models a e mo e app op ia e han Compu able Gene al Equilib ium Models (CGEMs) o
es ima ing sho - e m shocks like ha caused by COVID-19: a sudden and unexpec ed e en ,
leading o a signi ican educ ion in economic ac i i y and income. CGEMs a e mo e app op i-
a e o cap u ing long- un e en s, such as hose ela ed o ade libe aliza ion unde mul ila e al
ade ag eemen s (e.g., he No h Ame ican F ee T ade Ag eemen , NAFTA).4
SAM-based mul iplie models assume ixed p ices and unemploymen , whe eas in CGEMs,
p ices a e lexible in a con ex o ull employmen . In a mul iplie model he p ocess o adjus -
men o a shock is h ough quan i ies, whe eas in CGEMs i is h ough ela i e p ices. In addi-
1 See: In e na ional Mone a y Fund (2021); Economic Commission o La in Ame ica and he Ca ibbean (2021a).
2 We ob ained he SAM-MEX om INEGI, h ps://www.inegi.o g.mx/in es igacion/mcsm/. Accessed 29 Ap il 2021.
3 See, o example, In e na ional Food Policy Resea ch Ins i u e (IFPRI, 2020).
4 See Robinson e al. (1993); Adelman and Taylo (1991).
La in ame ican economic e iew (2022) 31:1 3/20
ion, SAM-based mul iplie models a e linea , whe eas CGEMs a e no . One consequence o
hese di e ences is ha mul iplie models o e es ima e he e ec s o a shock, whe eas CGEMs
unde es ima e i , unless he e is no unemploymen wi h a ull unc ioning o ma ke s (Adelman
and Taylo , 1991; Van Wyk e al., 2015).
The e a e o he empi ical s udies ha es ima e he e ec s o COVID-19 in Mexico ha
use econome ic app oaches o es ima e he di ec impac s o he pandemic (see, o example,
ECLAC (2021a), and Lus ig and Ma ínez Pabón (2021)). We discuss hei esul s below and
e alua e ou SAM-based mul iplie esul s by compa ing hem wi h o icial da a ega ding he
beha io o he Mexican economy in 2020.
The es o his pape is o ganized as ollows: In sec ion 2 we p esen a summa y o he
li e a u e ha es ima es he e ec s o COVID-19 on he economy o de eloping coun ies, in-
cluding Mexico and hose s udies based on applied mul iplie models. Sec ion 3 summa izes he
me hodological and empi ical app oach we ollow, and he da a se we use, as well as he p o-
cedu es we ollow o es ima e he impac o he pandemic on income dis ibu ion and po e y.
Sec ion 4 p esen s he shocks we simula e and hei likely impac on he Mexican economy; we
conside i s he shock caused by he pandemic, and hen hose ela ed o policy op ions o mi -
iga e i s e ec s. Also, Sec ion 4 compa es ou esul s wi h hose o o he s udies and o icial da a
on he e olu ion o he Mexican economy in 2020. In Sec ion 5 we p esen ou conclusions.
Li e a u e Re iew
Nume ous s udies ha e es ima ed he socioeconomic e ec s o COVID-19 h oughou he
wo ld. These es ima ions ha e been con inuously e ised o adap o he ups and downs in he
sp ead o he pandemic and he e u n o social dis ancing and lockdown measu es.5 A e
ini ial signi ican dispa i ies in o ecas s o he e ec s o COVID-19 on Mexican GDP by in-
e na ional and Mexican ins i u ions, mo e ecen es ima ions ha e con e ged. P ojec ions o
he educ ion in GDP es ima ed be o e o icial da a was published in Feb ua y 2021 anged
be ween 5% and 10%. P edic ions o 2021 now ange be ween 5% and 7% (Table 1).
The e a e also i e s udies ha es ima e he e ec s o COVID-19 based on mul iplie mod-
els applied o Mexico:6 Cen al Bank o Mexico (BANXICO, 2020b), Chapa (2020), Chapa
and Ayala (2020), Díaz-González (2020), and Dá ila-Flo es and Valdés-Iba a (2020). These
i e s udies use Mexico’s inpu -ou pu able o 2013 and es ima e he impac o COVID-19
depending on he du a ion o lockdown measu es. Thei me hodological di e ences a e in he
deg ee o sec o al disagg ega ion, hei shock scena ios, and hei assump ions o he eco e y
p ocess o he economy. BANXICO (2020b)—in a s udy made be o e he one e e ed o in
Table 1—adds supply shocks o he adi ional inal-demand shocks applied in he o he ou
s udies and simula es he shock based on s a e-le el da a. The es ima ions o Chapa (2020) a e
o Mexico as a whole and o he s a e o Nue o León. Chapa and Ayala (2020) examine he
ou egions o Mexico, and Díaz-González (2020), and Dá ila-Flo es and Valdés-Iba a (2020)
he coun y as a whole.
5 See, o example, Cues a Agui e and Hannan (2020) and Wo ld Bank (2020a).
6 SAM-mul iplie models ha e also been applied o A ican and Asian coun ies (see IFPRI, 2020).
Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
4/20
Table 1. P ojec ed Changes in G oss Domes ic P oduc (GDP) o Mexico
Ins i u ion
GDP Fo ecas in
2020
GDP
G ow h
Ra e
GDP Fo ecas in 2021
Fo 2020 Fo 2021 In 2020 Fo 2021 Fo 2022
O ganisa ion o Economic
Co-ope a ion and De elopmen
(OECD, 2020 and 2021)
-10.2% 3%
-8.5%
compa ed
o 2019,
wi h sea-
sonally
adjus ed
se ies
(INEGI,
2021)
5% 3.2%
In e na ional Mone a y Fund
(IMF, 2020b and 2021)-9% 3.5% 5%*** 3%***
Cen al Bank o
Mexico (Banxico,
2020a and 2021)
Th ee scena ios ac-
co ding o he shape o
economic eco e y:
6%, om
a ange
o 5% o
7%*
3%, om
a ange o
2% o 4%*
“V” 4.6% o
-8.8%
4.0% o
5.6%
“Deep V” -8.8% o
-11.3%
4.1% o
2.8%
“Deep U” -8.3% o
-12.8%
-0.5% o
1.3%
Mexican Sec e a y o Finance
and Public C edi (SHCP, 2020b
and 2021)
-7% o
-10%
3.6% o
5.6%
5.3%,
om a
ange o
4.3% o
6.3% **
3.6%,
om a
ange o
2.6% o
4.6%*
Wo ld Bank (WB, 2020b and
2021)-10% 3.7% 5% 3%
ECLAC (ECLAC, 2021a and
2021b)-9% 3.8% 5.8% 3.2%
*Range e lec s he pe sis ing unce ain y.
** 6.5% is he las pe cen age, no o icially published bu disclosed in s a emen s made by he Depu y Sec e a y
o Finance, du ing he panel “OECD Economic Ou look. How o P omo e he Reco e y in La in Ame ica,” on
May 31, 2021, and he Sec e a y o Finance in a p ess con e ence on Mexico’s hi d enhanced ollow-up epo
o he Financial Ac ion Task Fo ce (FATF), on June 28, 2021.
*** The IMF modi ied i s g ow h p ojec ion o 6.3% o 2020 and 4.2% o 2022, acco ding o he la es upda e,
eleased on July 27, 2021.
Sou ce: Au ho s’ elabo a ion based on da a om websi es o he lis ed ins i u ions (see Re e ences).
Wha is simila in he i e s udies a e he de ini ions o he lockdown measu es. All i e a e
based on he nonessen ial economic ac i i ies shu down by he go e nmen unde he dec ee
con aining he o de s o dealing wi h he public heal h eme gency (DOF, 31 Ma ch 2020).
Howe e , he di e ences in me hodology o he i e s udies p oduce ma kedly di e en es i-
ma es. Fo example, in op imis ic scena ios (lockdown measu es li ed in he second o hi d
qua e o 2020) he es ima ed 2020 GDP educ ion anges om 5.6% (BANXICO, 2020b)
o 14.8% (Díaz-González, 2020). In pessimis ic scena ios, whe e lockdown measu es ex end
beyond he second o hi d qua e , he es ima es ange om 8.5% (Chapa and Ayala, 2020) o
17.4% (Díaz-González, 2020). These la ge di e ences in p ojec ions a e explained no only by
he s udies’ use o di e en empi ical s a egies, bu also by hei ailu e o conside he e ec s
o changes in go e nmen policy o mi iga e he social and economic e ec s o he pandemic.

La in ame ican economic e iew (2022) 31:1 5/20
To mo e ully examine he p e ailing unce ain ies abou he in ensi y and du a ion o he
pandemic and he co esponding lockdown measu es, we ollow a di e en simula ion s a egy.7
We calcula e he SAM-based mul iplie e ec s o he pandemic on he Mexican economy us-
ing mo e ecen o icial da a om INEGI on i s beha io du ing he pandemic: o July 2020.
Using he mul iplie s, we simula e public policies aimed a educing he ad e se e ec s o he
pandemic, as well as al e na i e policies. Unlike p e ious s udies, we calcula e he e ec s o he
pandemic and o he simula ed policies on income dis ibu ion and he incidence o po e y, no
jus i s di ec and indi ec impac s on he economy.8
Empi ical app oach
Typically, a mul iplie model assumes ha economic ac i i ies use inpu in ixed p opo ions o
ou pu , ha echnology and p e e ences a e linea , ha p ices a e ixed, and ha adjus men s
o shocks a e hus made h ough changes in quan i ies. A SAM-mul iplie model con ains wo
g oups o accoun s, endogenous and exogenous, and he equilib ium equa ion o he model can
be exp essed as:
, (1)
whe e is endogenous income, is an n x n iden i y ma ix (whe e n is he numbe o
endogenous accoun s), An is a squa e ma ix o a e age p opensi ies o consump ion, and X is
he ma ix o exogenous injec ions o endogenous accoun s. is he SAM-mul iplie ma ix
ela ing endogenous income wi h exogenous a iables . cap u es he di ec and indi ec
e ec s o exogenous shocks, and he equa ion hus de e mines he equilib ium o p oduc s and
incomes consis en wi h any le el o exogenous en ies (Round, 2003). Figu e 1 illus a es he
di ec and indi ec e ec s o an exogenous shock cap u ed by a mul iplie model.
Figu e 1. Mul iplie Model Scheme
Sou ce: Au ho s’ elabo a ion.
7 We also use a mo e ecen da ase , o 2018, p o ided wi h he social accoun ing ma ix (SAM) o Mexico, bu no i s in-
pu -ou pu able.
8 The e a e o he s udies es ima ing he e ec s o COVID-19 on po e y and inequali y. In Sec ion 4 we compa e he esul s o
hese s udies wi h ou own and wi h o icial da a on he beha io o he Mexican economy in 2020.
Λy=MX+ ΛX
Exogenous Demand
Shock ΛX
Change in
Inpu s Demand
Change in
P oduc ion (di ec
e ec )
Change in Income
o Ins i u ions
C
hange in
Cons
ump ion
D
emands
To al Mul iplie
E ec :
Λy
Leakages
Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
6/20
A schema ic SAM is p esen ed in Table 2: an accoun ing ame ha cap u es he in e con-
nec ions o an economy, including i s social componen s, o a pe iod, gene ally a yea .
Table 2. Basic SAM Accoun s
EXPENDITURES
INCOME
1 2 3 4 5
TOTAL
Ac i i ies Fac o s Ins i u ions Capi al In-
es men
Res o he
Wo ld
1. Ac i i ies
P ima y
Manu ac u es
Se ices
Inpu -ou pu
able Consump ion In es men Expo s To al sales
2. Fac o s
Labo
Capi al
Value added T ans e s
Value added
(GNP a ac-
o p ices)
3. Ins i u ions
a. P i a e house-
holds by income
decile, e c.
Value added
ans e s T ans e s T ans e s ( e-
mi ances)
To al ins i u-
ion
income
b. Public (go .) Di ec axes Taxes Di ec axes
4. Capi al Sa ings Capi al ans-
e s To al sa ings
5. Res o he
wo ld Impo s Impo s
TOTAL To al pay-
men s
To al pay-
men s o
ac o s
To al expendi-
u es
To al in es -
men
Income om
ab oad
To als:
income/ ex-
pendi u e
Sou ce: Au ho s’ elabo a ion.
The SAM-MEX con ains 171 goods and se ices; 71 p oduc i e ac i i ies; 18 ypes o labo
(di ided by gende , age, and schooling) and physical capi al; 23 ins i u ional accoun s, en o
which co espond o households di ided by income decile, plus he cen al go e nmen , wo
non- inancial socie ies (one p i a e and one public), and en inancial ins i u ions ha include
in en o y change and g oss ixed capi al o ma ion (GFCF); 18 capi al accoun s; 27 inancial
accoun s; and he es o he wo ld.
Following s anda d p ocedu es, we selec ed exogenous accoun s ha include ins i u ions’
inal demand, go e nmen expendi u es, capi al o ma ion, and he es o he wo ld. Since one
o ou pu poses is o es ima e he likely impac o al e na i e policies o mi iga e he e ec s o
he pandemic, we dis inguished go e nmen expendi u es as ollows: inal demand o goods
and se ices, paymen s o ins i u ions, p ope ies and ans e s o ins i u ions ( he la e includ-
ing mone a y ans e s om social p og ams o households), changes in go e nmen in en o y
and in es men s in GFCF, and public deb .
The SAM-mul iplie analysis allows o es ima ion o he impac o he pandemic on house-
hold income dis ibu ion and po e y. Wi h espec o he o me we used wo measu es. The
i s is called he Gini concen a ion index o GCI (Medina, 2001; de Miguel and Pé ez-Mayo,
2006), and is de ined as ollows:
La in ame ican economic e iew (2022) 31:1 7/20
, (2)
whe e is he cumula i e p opo ion o popula ion in g oup i and he cumula i e in-
come o g oup i. indica es no income inequali y and means o al inequali y.
The second is he Theil index (TI):
, (3)
whe e and co espond o ela i e income dis ibu ion and he popula ion o g oup i,
espec i ely. Like GCI, a TI close o ze o indica es low le els o inequali y.
Wi h espec o po e y, we ollow Pya and Round (2006) in measu ing he changes in he
incidence o po e y caused by COVID-19, applying he ollowing equa ion:
, (4)
whe e i is he numbe o poo people in he household g oup I; S is he numbe o poo peo-
ple in ou s udy, iden i ied as hose wi h a cu en income below he CONEVAL po e y line;9
is he numbe o people included in an income g oup, g; is he elas ici y o he incidence
o po e y o households in g oup i wi h espec o changes in hei a e age pe capi a income;
is he o al income o he i h household g oup; is a ec o wi h he i h elemen equal o 1
and all o he elemen s equal o 0; and is he sub-ma ix g x s o accoun ing mul iplie s o
ac i i ies h oughou household g oups (whe e g is he numbe o household g oups and s is he
numbe o ac i i ies in he SAM); and x is he ec o o in lows om he exogenous sec o s in
he o iginal SAM.10
Simula ions and Resul s
In his sec ion we p esen ou simula ions and he main esul s ob ained, i s in ela ion o he
e ec s o COVID-19 on he economy and Mexican socie y, and hen wi h espec o al e na i e
policies o mi iga e he e ec s o he pandemic.
The Impac o COVID-19
The SAM-MEX models one yea . Gi en he da a a ailable when he s udy was pe o med,
we use mon hly da a o simula e he economic impac o COVID-19, as ollows: 1) each exoge-
nous mon hly shock is ea ed as i i we e an annual impac and he mul iplie e ec is ob ained
in acco dance wi h equa ion (1); 2) he equi alen mon hly mul iplie e ec s a e ob ained by
di iding hese alue by wel e; and 3) hese mon hly shocks a e agg ega ed o ob ain he o al
shock o he pe iod analyzed (Janua y-July 2020). The exogenous shocks on inal demand o
goods and se ices, on emi ances ecei ed by households om ab oad, on in en o y changes,
and on GFCF a e simula ed simul aneously, using da a om he INEGI Economic In o ma ion
Bank (BIE) (INEGI, 2018a) and om he Banco de México (2020c), co e ing he i s se en
mon hs o he i s wo qua e s o 2020 (Table 3).
Final demand includes domes ic and o eign demand using mon hly da a om INEGI on
sales om sec o al p oduc i e ac i i ies a cons an 2013 p ices.11 Da a on sales o he cons uc-
9 The Na ional Council o he E alua ion o Social De elopmen Policy (Consejo Nacional de E aluacion de la Poli ica de
Desa ollo Social, CONEVAL) is he public au onomous en i y o icially designa ed o measu e po e y in Mexico.
10 To apply equa ions (2) h ough (4) we equi ed addi ional da a, which was ob ained om he INEGI Na ional Household
Income-Expendi u e Su ey (ENIGH) (INEGI, 2018b). Ou es ima ions a e a ailable upon eques .
11 Excep o he manu ac u ing sec o , he es o he da a se ies a e a cons an p ices. We de la e he se ies based on i s implici
p ice index.
Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
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ion sec o come om he Na ional Su ey o Cons uc ion En e p ises (ENEC); da a o he
manu ac u ing sec o om he Mon hly Na ional Su ey o Manu ac u ing Indus ies (EMIM);
da a o comme cial se ices, om he Mon hly Su ey o Comme cial En e p ises (EMEC);
and da a o non- inancial se ices om he Mon hly Su ey o Se ices (EMS).12 Changes in
inal demand a e no included o p ima y and inancial se ices because hese ac i i ies e no
subjec o lockdown measu es.
Da a on emi ances come om he mon hly changes epo ed by Banco de México Eco-
nomic In o ma ion Sys em (Banxico, 2020c). Since his o icial sou ce does no p o ide mon hly
da a on he ecipien s o hese ans e s by income decile, we applied he same a e o change o
he en household g oups in he SAM-MEX. Da a on in en o y changes o he i s and second
qua e s o 2020 come om INEGI (INEGI, 2020d), as do mon hly da a on GFCF (INEGI,
2020c).
All o he da a on exogenous shocks is used o es ima e he mon hly a e o change wi h
espec o he same mon h o he p e ious yea .13 Table 3 shows he o al alues o he simula -
ed shocks, ha is, he sum o each mon hly shock applied o SAM-MEX exogenous accoun s,
and he endogenous SAM-MEX accoun s di ec ly a ec ed by hem. We assume ha shocks
occu ed simul aneously in he analyzed pe iod.
Table 3. Simula ed Exogenous Shock on Endogenous Accoun s*
Endogenous accoun Exogenous Modi ica ion Exogenous Shock (millions o pesos)
Goods and Se ices Final demand -1,754,577.06
Households Remi ances 37,998.93
In en o y Changes In en o y Changes -112,176.34
G oss Fixed Capi al Fo ma ion Ne Fixed Capi al Fo ma ion -143,588.15
* The exchange a e has luc ua ed a ound 20 MXN/USD in ecen yea s.
Sou ce: Au ho s’ es ima ions using INEGI (2020c and 2020d) and Banxico (2020c) da a.
Table 4 shows mon hly labo and capi al alue added (VA) be o e and du ing he COVID-19
pandemic in 2020, as compa ed wi h 2019. The igu es e eal ha he pandemic deepened neg-
a i e a es o g ow h al eady p esen du ing he i s h ee mon hs o 2020. The d op in o al
VA o MXN $35 billion in Janua y eached MXN $386 billion in Ap il and MXN $425 billion
in May. These educ ions began o dec ease in June and July when lockdown measu es and
social dis ancing we e elaxed.
Table 4. Mon hly Impac o COVID-19 on Value Added wi h Respec o 2019 (millions o pesos and pe cen
changes)
Mon h (2020) Millions o Pesos Pe cen age Changes
Labo Capi al To al Labo Capi al To al
Janua y -15,251.72 -19,712.61 -34,964.33 -2.97% -1.49% -1.90%
Feb ua y -13,415.42 -19,791.05 -33,206.46 -2.61% -1.49% -1.81%
Ma ch -31,550.01 -55,577.99 -87,128.00 -6.15% -4.20% -4.74%
Ap il -108,832.04 -276,678.12 -385,510.16 -21.21% -20.88% -20.97%
May -119,792.10 -304,965.02 -424,757.12 -23.34% -23.02% -23.11%
12 The ENEC, EMIM, EMEC, and EMS da a can be ound in INEGI (2018b).
13 We implemen he X11 me hod o adjus he non-seasonally adjus ed se ies, using he “seas()” unc ion in “seasonal” o he R
package.
La in ame ican economic e iew (2022) 31:1 15/20
In July 2021, CONEVAL published i s es ima ions o changes in he incidence o po e y
in 2020, using INEGI da a. Acco ding o hese es ima ions, he p opo ion o Mexicans li ing
below he po e y line inc eased om 48.8% in 2018 o 56-56.7% in 2020. The la e igu e is
simila o ou es ima ion o an inc ease o 57% (CONEVAL, 2021 and Table 6, espec i ely).
These h ee compa isons con i m ha bo h ou model and he esul s o a s udy conduc ed
be o e he publica ion o o icial da a o 2020 e lec wha has been epo ed abou he changes
in he Mexican economy b ough abou by he pandemic.
Conclusions
The COVID-19 pandemic ook wo ld leade s by su p ise. A e a yea and a hal o his heal h
c isis, unce ain ies emain abou he sp ead o he disease, and hus abou he social dis ancing
and lockdown measu es equi ed o con ain i and i s socioeconomic consequences.
In Mexico, since he implemen a ion o he 2019-2024 Na ional De elopmen P og am, he
ede al go e nmen has p io i ized social policies, e lec ed by he inc ease in he budge o he
Sec e a y o Social De elopmen (now called he Sec e a y o Wel a e). In cons an 2018 pesos
his budge inc eased by 41% om 2018 o 2019 and by 20% om 2019 o 2020, no wi hs and-
ing he aus e i y measu es applied o he ede al budge o 2020. P esiden López Ob ado has
also modi ied policies implemen ed by he Sec e a y o Wel a e, including he discon inuance
in 2019 o P ospe a, a condi ional cash ans e p og am aimed a educing household po e y,
and an inc ease in he budge o pensions o he elde ly and disabled in 2019 and 2020. In
2020 hese wo pension p og ams accoun ed o 81.8% o he go e nmen ’s budge o social
p og ams (SHCP 2019, 2020a; see also Mexico, n.d.).
These policies a e no di ec ly designed o mi iga e he e ec s o COVID-19 on poo house-
holds; indeed, ou es ima ions o he di ec and indi ec impac s o he pandemic indica e ha
he incidence o po e y inc eased om Ap il o July 2020, despi e an inc ease in he emi anc-
es households ecei ed om amily membe s wo king ab oad. Thus, in o de o mi iga e he
nega i e e ec on income and po e y, we p opose di e en o addi ional social policies han he
ones cu en ly in o ce. We examine wo al e na i es: he i s , an uncondi ional cash ans e
p og am o households in po e y ei he be o e o as a esul o COVID-19, and he second,
unemploymen insu ance. Conside ing he limi a ions o public unding and poli ical deba e
o e whe e o channel social subsidies, we simula e he likely mul iplie e ec s o hese wo
al e na i es, applying he same budge o each o pu poses o compa ison. We ind ha di ec
mone a y cash ans e s o households in po e y a e p e e able o unemploymen insu ance o
hose who ha e los hei jobs du ing he pandemic: he cash ans e s be e alle ia e income
loss, inequali y, and he incidence o po e y.
These indings a e based on he applica ion o a model using empi ical da a, and a e no
in luenced by he ideological biases and poli ical in e es s ha ha e cha ac e ized he policy de-
ba e be o e and du ing he pandemic. We hus hope ha i con ibu es o he design o e icien
and e ec i e go e nmen measu es o mi iga e he e ec s o his c isis. Howe e , addi ional
esea ch is equi ed o ully unde s and he consequences o he pandemic on he economy
and socie y o Mexico, as well as o explo e he bes policies o p omo e u u e de elopmen . I
is possible o simula e exis ing policies and possible al e na i es wi h mul isec o al app oaches
based on he social accoun ing ma ix o Mexico, as da a becomes a ailable. Based on he
SAM-MEX, i would be possible o ex end he cu en s udy o co e a longe pe iod and o
inco po a e ela i e p ices based on a compu able gene al equilib ium model.

Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
16/20
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Appendix A. Es ima ion o Unemploymen in Mexico Du ing he Qua an ine, by
Income Decile
A necessa y inpu in his s udy is he es ima ion in he decline o employmen du ing he qua an-
ine by income decile. This in o ma ion can only be pa ially ob ained om he ENCOVID-19
su ey, gi en ha i includes he numbe o unemployed indi iduals du ing he i s i een days
o Ap il, bu does no p o ide da a abou hei income be o e he qua an ine. To add ess his lim-
i a ion, we ollow he me hodology o He nández-Solano e al. (2020), who use he me hodology
o Lawless e al. (1978) and in o ma ion om he ENIGH 2018 o calcula e he bes easonable
model o linea eg ession, which p edic s he loga i hm o household pe capi a income based
on socioeconomic cha ac e is ics. Wi h his calib a ed model we es ima e household income om
he ENCOVID-19 be o e he pandemic. This me hod is possible since each o he independen
a iables o he model is selec ed o mee he ollowing condi ions. Fi s , he in o ma ion on he
independen a iable is ound in he ENIGH 2018 and he ENCOVID-19. Second, he a iable
in he ENCOVID-19 mus ha e e ospec i e in o ma ion o he mon h o Feb ua y (be o e he
pandemic) o mus no ha e been a ec ed du ing he i s mon h o he pandemic. The esul s o
he eg ession model es ima ed om he ENIGH 2018 a e shown in Table A.
The ENCOVID-19 allows us o indi ec ly compu e household pe capi a income o Feb-
ua y, al hough he pe cen age o non- esponses educes he alid da a o 49% o he o iginal
sample. Ne e heless, pe capi a income pe mi s us o alida e he p edic ions o he model.
The indings show ha he a e age pe capi a income p edic ed by he econome ic model is
MXN $3,910.633 pe mon h, whe eas he igu e ob ained indi ec ly om ENCOVID-19 da a
is MXN $4,820.045; he medians a e MXN $2,935.375 and MXN $2,381.652, espec i ely.
Socioeconomic E ec s o COVID-19 in Mexico: A Mul isec o al App oach and Policy Op ions
He nández-Solano, e al.
20/20
Table A. Linea Reg ession Model o Explain he Loga i hm o Pe Capi a Household Income
Independen a iable Coe icien *
Numbe o indi iduals pe oom in he household -0.038
(-0.004)
Numbe o ull ba h ooms (wi h showe and oile ) in he household 0.198
(-0.006)
Numbe o household membe s -0.32
(-0.008)
Squa e o numbe o household membe s 0.016
(-0.001)
Household has a pe manen in e ne connec ion (1 yes, 0 no) -0.239
(-0.008)
Numbe o ca s o ucks belonging o he household 0.157
(-0.007)
Numbe o employed household membe s, 14 yea s o olde 0.192
(-0.004)
Household head comple ed elemen a y school (1 yes, 0 no) 0.166
(-0.009)
Household head comple ed junio high school (1 yes, 0 no) 0.259
(-0.009)
Household head comple ed high school (1 yes, 0 no) 0.43
(-0.011)
Household head who comple ed college (1 yes, 0 no) 0.784
(-0.013)
Household belongs o 2nd g oup o s a es (1 yes, 0 no)** 0.207
(-0.012)
Household belongs o 3 d g oup o s a es (1 yes, 0 no)** 0.276
(-0.011)
Household belongs o 4 h g oup o s a es (1 yes, 0 no)** 0.332
(-0.013)
Household belongs o 5 h g oup o s a es (1 yes, 0 no)** 0.369
(-0.012)
Household belongs o 6 h g oup o s a es (1 yes, 0 no)** 0.418
(-0.012)
Household belongs o 7 h g oup o s a es (1 yes, 0 no)** 0.466
(-0.012)
Household belongs o 8 h g oup o s a es (1 yes, 0 no)** 0.571
(-0.013)
Cons an 7.973
(0.019)
Numbe o obse a ions 72,267
* S anda d e o s a e shown in pa en heses. All a iables a e s a is ically signi ican (p < 0.01).
** 2nd g oup o s a es: Puebla; Tabasco; Tlaxcala; and Zaca ecas.
3 h g oup o s a es: Guanajua o, Hidalgo, Michoacán, and Mo elos.
4 h g oup o s a es: Campeche, Du ango, Es ado de México, and San Luis Po osí.
5 h g oup o s a es: Naya i , Sinaloa, Tamaulipas, and Yuca án.
6 h g oup o s a es: Aguascalien es, Chihuahua, Colima, and Que é a o.
7 h g oup o s a es: Baja Cali o nia, Coahuila, Jalisco, and Sono a.
8 h g oup o s a es: Baja Cali o nia Su , Ciudad de México, Nue o León, and Quin ana Roo.
Sou ce: Au ho s’ es ima ions based on ENIGH 2018 and He nández-Solano e al. (2020).