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Slums and Pandemics

Authors 
Cezar Santos
Daniel da Mata
Tiago Cavalcanti
Luiz Brotherhood
Publication Year 
2020
JEL Code 
C63 - Computational Techniques
D62 - Externalities
E17 - Forecasting and Simulation
I10 - General
I18 - Government Policy; Regulation; Public Health
O18 - Regional, Urban, and Rural Analyses
Abstract 
This paper studies the role of slums in shaping the economic and health dynamics of pandemics. Using data from millions of mobile phones in Brazil, an event-study analysis shows that residents of overcrowded slums engaged in less social distancing after the outbreak of Covid-19. We develop a choice-theoretic equilibrium model in which individuals are heterogeneous in income and some people live in high-density slums. The model is calibrated to Rio de Janeiro. Slum dwellers account for a disproportionately high number of infections and deaths. In a counterfactual scenario without slums, deaths increase in non-slum neighborhoods. Policy simulations indicate that: reallocating medical resources cuts deaths and raises output and the welfare of both groups; mild lockdowns favor slum individuals by mitigating the demand for hospital beds, whereas strict confinements mostly delay the evolution of the pandemic; and cash transfers benefit slum residents to the detriment of others, highlighting important distributional effects.
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