How do slums shape the economic and health dynamics of pandemics? A difference-in-differences analysis using millions of mobile phones in Brazil shows that residents of overcrowded slums engaged in less social distancing after the outbreak of Covid-19. We develop and calibrate a choice-theoretic equilibrium model in which individuals are heterogeneous in income and some people live in high-density slums. Slum residents account for a disproportionately high number of infections and deaths and, without slums, deaths increase in non-slum neighborhoods.

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.