The Emergency Family Income (IFE) in Argentina: could it become a permanent safety net?

Abstract

Argentina adopted an early lock-down strategy to mitigate the COVID19 pandemic in March 2020. To allow households that were out of the formal labour market to abide by the lock-down, an Emergency Family Income (IFE) was given to households with no pension or formal labour income between April and September 2020. The benefit was praised for its role in reducing poverty and providing for millions of households that had lost their income, but it was discontinued after September 2020 when most of the COVID19 restrictions had been lifted. In this paper, we run counter-factual dynamic simulations of what would have been the cost and distributive impact of maintaining the IFE after September 2020, and making it a permanent benefit. We show this would have represented initially a yearly additional expenditure of nearly 1.5% of GDP, with a downward trend. This is comparable to the cost of all family benefits. We also estimate that a permanent IFE would have significantly reduced income inequality. We thus show a permanent IFE would be financially feasible, although whether it is desirable or how it should be funded is open to debate. © 2021, Calcagno.