Vol.:(0123456789) Discover Sustainability (2022) 3:25 | https://doi.org/10.1007/s43621-022-00095-6 1 3 Discover Sustainability Research Efect of Covid‑19 on households welfare in Afar Regional State, Ethiopia Dagmawe Menelek Asfaw 1  · Abdurhman Kedir Ali 1  · Mohammed Adem Ali 1 Received: 13 June 2022 / Accepted: 1 August 2022 © The Author(s) 2022 Abstract The main objective of this study was to analyze the efect of COVID-19 on social welfare in the case of Afar regional, state, Ethiopia using panel data collected from a sample of 384 in Asyaita, Dubti Samara-Logia, and Awash town. Both descriptive statistics and econometric models were used to analyze the data. The descriptive analysis results revealed that the main source of income emanated from self-employment (81.67%), from the total households 70% of them were engaged in the service sector, due to COVID-19 the income trends of 81% of households decreased, increase expenditure on food & food items (13%) and service delivering (15%). After conducting necessary pre and post-estimation tests, the econometric model found that the three basic policy variables (number of COVID-19 victims, number of days with the COVID-19 disease and transportation ban) adversely afected the welfare of the society by lessening the income of house- holds and growing their expenditures. Finally, considering regional experience, econometric and descriptive results, this study recommends that the government and the concerned policy maker should give more attention and subsidize the service sector, support those self-employee and daily laborers, make awareness to the society about COVID-19 epidemic, place an alternative mechanism to fll potential trade gaps. Keywords COVID-19 · Social welfare · Panel data analysis · Fixed efect · Random efect 1 Introduction The Novel Coronavirus, or COVID-19, a pandemic is a global challenge that requires coordinated eforts from govern- ments, individuals, businesses, and various stakeholders. The pandemic causes several shocks to occur at once, including health, supply, demand, and fnancial shocks, causing the world economy to experience historic and unprecedented shocks [1]. There will inevitably be a general drop in economic activity both locally and internationally as a result of government eforts to contain the COVID-19 epidemic through partial and complete business closures. If the pandemic continues over an extended length of time, this contraction in economic activity results in an economic recession. Cultures with lower socioeconomic classes are more susceptible to COVID-19’s rising chronic illness rates, which are exacerbated by problems with the economy and social welfare. In turn, this lowers productivity even more and drives up health care expenses, increasing poverty and, by extension, disease. A "disease-driven poverty trap" exists here [2]. From an economic standpoint, the main problem is not simply the quantity of COVID-19 instances, but also the degree of economic activity disruption, which in turn increases the level of health risks [3]. * Dagmawe Menelek Asfaw, dagmawemenelek@gmail.com | 1 Department of Economics, College of Business and Economics, Samara University, P.O.Box 132, Samara, Ethiopia.