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This brief aims at measuring the poverty and distributional impacts of the international financial crisis on three selected countries (Bangladesh, Mexico, and the Philippines). The paper is to contribute into designing appropriate policy responses, as well as informing policies to protect poor people in the event of future economic shocks.

The paper suggests some increases in the level and depth of poverty as a result of the crisis in all three countries, with the extent of increase largely depending on the size of the macroeconomic impact in the country.

The document shows that the crisis has no significant impact on aggregate inequality indexes in any of the three countries. Yet, this masks larger changes in the underlying distribution of income and consumption. Indeed, some regions and income groups within each country suffer more losses than others, depending on which sectors and income sources are more likely to be affected in the country.

The main findings of the paper are:

• in all three countries, the impacts are relatively large in the middle parts of the income distribution
• this can be attributed to significant employment shocks to urban areas and particularly the manufacturing sectors that employ a large number of workers in middle-income households
• the “crisis-vulnerable” households seem more skilled and urban than the chronically poor, but less so than the general population. They are also more likely to be economically active than the chronically poor, indicating that the crisis would have had a sizable effect on the number of “working poor”
  

Based on these results, the authors suggest that expanding existing safety-net programs (targeted toward the chronically poor) to mitigate the losses of the newly poor may not be effective. Instead, new interventions that address increased levels of vulnerability and that protect households against risk may be required.

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