COVID-19 pandemic intensity, migration status, and household financial vulnerability: evidence from India

Abstract

This paper employs COVID-19 as a quasi-natural experiment to conduct an analysis of the heterogeneous effects of the pandemic on households’ financial vulnerability across districts in India and investigates the role of migration and gender of the household head in moderating financial vulnerability. Using Indian panel household surveys and a difference-in-differences approach with coarsened exact matching, we provide causal evidence of a larger increase in the financial vulnerability index (FVI) of households in Indian districts with a higher incidence of COVID-19 cases per capita. A similar effect is observed when considering satellite-based night-time lights, a proxy for economic activity. Furthermore, during the pandemic, households with an out-migrant family member experienced relatively lower FVI, with a more pronounced effect for female-headed households, likely due to the financial help given by migrants. However, households that had an out-migrant in the pre-pandemic period, but not during the pandemic, were more financially vulnerable. This study provides a novel contribution to the literature through a better understanding of the varied effects of the pandemic-induced health and economic shocks on households’ financial vulnerability based on pandemic intensity, migration status, and gender.