Economic activity and inequality in Mexico during the pandemic: ICT and employment in a panel data analysis (2020–2022)

Abstract

The COVID-19 crisis impacted the global economy and highlighted structural gaps in developing countries such as Mexico. This research analyzes the association between ICT, employment, and economic activity during the 2020–2022 sanitary crisis. Using a fixed-effects panel model with 288 quarterly observations, the study examines whether income levels at the state level are related to the magnitude of pandemic-related effects. Results for the national model indicate that ICT (β = 0.0053; p = 0.0062) and employment (β = 0.0140; p = 0.0012) were positively associated with economic activity. In contrast, COVID-19 with lago of two periods (t–2) showed a significant negative relationship (β = -0.0752; p < 0.0001). Income-based segmentation reveals that the negative coefficient for COVID-19 with lag of two periods (t-2) was more pronounced in low-income states (β = -0.1463; p < 0.0001) compared to high-income states (β = -0.0648; p = 0.0002). In conclusion, while ICT and employment were linked to mitigating the crisis's effects, the findings suggest that income disparities are associated with increased sensitivity to sanitary shocks in states with fewer resources. These results underscore the need for differentiated policies that strengthen digitalization and promote formal employment as economic resilience strategies.