Journal Article
The impact of the COVID-19 pandemic on the poor

We examine the impact of the COVID-19 pandemic on the livelihoods of the poor in a semi-rural setting in Bangladesh. We use an unusually rich dataset which tracks the economic and financial transactions of sixty poor and very poor individuals and their families on a daily real-time basis for 12 months, from 1 October 2019 to 30 September 2020.

We use a mixed methods approach, combining qualitative case studies of five diarists with a quantitative analysis of the daily data extracted from the diaries. We document the behavioral responses to COVID-19 by individual diarists, which shows the varied experiences of the poor during the pandemic. Further, we find that the pandemic had significant negative effects on the livelihoods of the poor in our study, with financial inflows and outflows, incomes and household expenditures much below pre-pandemic levels in the pandemic period.

Government lockdowns in April and May 2020 led to a sharp decline in incomes and household expenditures. While incomes and expenditures recovered in the post-lockdown period, they remained below pre-pandemic levels. Financial transactions such as borrowing, saving withdrawals and exchange of monetary gifts came to a standstill in the lockdown period, making it difficult for households to use conventional coping mechanisms in the face of a large unanticipated decline in incomes.

Exploring the coping mechanisms that households used to adjust to the declines in incomes and their lack of access to formal and informal sources of finance, we find that households drew down on their cash reserves at home as well as cutting down on non-food expenditures to protect their spending on food.