Slums and Pandemics

Working Paper: CEPR ID: DP15131

Authors: Luiz Brotherhood; Tiago Cavalcanti; Daniel da Mata; Cezar Santos

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 poorer agents live in high-density slums and others do not. 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 fall overall but 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 in detriment of others, highlighting important distributional effects.

Keywords: COVID-19; slums; health; social distancing; public policies

JEL Codes: E17; I10; I18; D62; O18; C63

Causal Claims

Cause	Effect
Reallocating medical resources (I14)	Cut deaths and raise output for slum residents (O15)
Slum dwellers (I32)	High number of COVID-19 infections and deaths (I12)
Counterfactual scenario without slums (R28)	Decrease in overall deaths but increase in non-slum neighborhoods (I14)
Mild lockdowns (E65)	Favor slum individuals by reducing demand for hospital beds (R28)
Strict confinements (D10)	Delay pandemic's progression (C41)
Cash transfers (F16)	Benefit slum residents more than others (R28)
Non-pharmaceutical interventions (NPIs) (O35)	Less social distancing in slums (I14)
Overcrowded slums (I32)	Less social distancing (C92)