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COVID-19 and Economic Inequality : Short-Term Impacts with Long-Term Consequences (English)

This paper examines the short-term implications of the COVID-19 pandemic for inequality in developing countries. The analysis takes advantage of high-frequency phone survey data collected by the World Bank to assess the distributional impacts of the pandemic through the channels of job and income losses, food insecurity, and children’s education in the early days of the pandemic and subsequent period of economic recovery leading up to early 2021. It also introduces a methodology for estimating changes in income inequality due to the pandemic by combining data from phone surveys, pre-pandemic household surveys, and macroeconomic projections of sectoral growth rates. The paper finds that the pandemic had dis-equalizing impacts both across and within countries. Even under the assumption of distribution-neutral impacts within countries, the projected income losses are estimated to be higher in the bottom half of the global income distribution. Within countries, disadvantaged groups were more likely to have experienced work and income losses initially and are recovering more slowly. Inequality simulations suggest an increase in the Gini index for 29 of 34 countries in the sample, with an average increase of about 1 percent. Although these short-term impacts on inequality appear to be small, they suggest that projections of global poverty and inequality impacts of COVID-19 under the assumption of distribution-neutral changes within countries are likely to underestimate actual impacts. Finally, the paper argues that the overall inequality impacts of COVID-19 could be larger over the medium-to-long term on account of a slow and uneven recovery in many developing countries, and disparities in learning losses during pandemic-related school closures, which will likely have long-lasting effects on inequality of opportunity and social mobility.

Details

  • Author

    Narayan,Ambar, Cojocaru,Alexandru, Agrawal,Sarthak, Bundervoet,Tom, Davalos,Maria Eugenia, Garcia,Natalia, Lakner,Christoph, Mahler,Daniel Gerszon, Montalva Talledo,Veronica Sonia, Ten,Andrey, Yonzan,Nishant

  • Document Date

    2022/01/13

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9902

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2022/01/13

  • Disclosure Status

    Disclosed

  • Doc Name

    COVID-19 and Economic Inequality : Short-Term Impacts with Long-Term Consequences

  • Keywords

    Poverty and Equity; Work Remotely; income loss; lower level of education; access to basic service; access to financial service; Micro and Small Enterprises; low per capita income; labor force participation rate; low levels of education; purchasing power parity term; increased inequality; job loss; inequality within country; Learning and Innovation Credit; change in income; human capital development; inequality of opportunity; lack of resource; households with child; increase in inequality; change in welfare; disposable income inequality; household and individual; country fixed effect; increase in income; consumption-smooth; lack of income; sale of asset; sample selection method; global economic crisis; employment and unemployment; impact on health; million people; increase in population; Gender and Education; vulnerable social group; high income inequality; lower income inequality; disparities in access; deferral of tax; loss of job; social security contribution; social protection expenditure; safety net program; recent studies estimate; years of schooling; generation of children; access to internet; education of child; education child; description of data; data collection effort; food security status; government policy response; data on income; low socioeconomic status; bottom income quintile; working age population; loss of employment; income due; household survey data; effects of gender; changes in inequality; high poverty rate; sectoral growth rate; difference in poverty; households with income; distribution of household; school closure; rural area; food insecurity; household head; short term impact; extreme poverty; global inequality; global income; short-term impact; learning activity

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Citation

Narayan,Ambar Cojocaru,Alexandru Agrawal,Sarthak Bundervoet,Tom Davalos,Maria Eugenia Garcia,Natalia Lakner,Christoph Mahler,Daniel Gerszon Montalva Talledo,Veronica Sonia Ten,Andrey Yonzan,Nishant

COVID-19 and Economic Inequality : Short-Term Impacts with Long-Term Consequences (English). Policy Research working paper,no. WPS 9902,COVID-19 (Coronavirus) Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/219141642091810115/COVID-19-and-Economic-Inequality-Short-Term-Impacts-with-Long-Term-Consequences