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EMEs and COVID-19: Shutting Down in a World of Informal and Tiny Firms

Emerging economies are characterized by an extremely high prevalence of informality, small-firm employment and jobs not fit for working from home. These features factor into how the COVID-19 crisis has affected the economy. The authors develop a framework that, based on accounting identities and actual data, quantifies potential job and income losses during the crisis and recovery for economies with different economic organization structures. Their analysis incorporates differential exposure of jobs across categories of firm-size and formality status, as well as sectors and occupations.

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