IMF Working Papers

This study examines the nexus between inequality, household debt, and social protection in Thailand, focusing on their interrelation during the COVID-19 shock. Using data from the Thailand Household Socio-Economic Surveys of 2019, 2021, and 2023, we apply the Recentered Influence Function regression and decomposition method to identify the drivers of inequality in Thailand and demonstrate how the pandemic, despite its severe economic impact, led to a decline in income inequality through these drivers. Our analysis highlights the role of social protection, showing that social assistance helped reduce income inequality, while social insurance exerted the opposite effect in Thailand. Additionally, we investigate how income inequality and disparities in acess to social protection affected household debt dynamics during the pandemic. Our findings show that lower-income households were more likely to be indebted following the pandemic, possbly reflecting increased income shortfalls. Social assistance alleviated the pandemic’s effects on household debt by easing income constraints, whereas social insurance exacerbated them.