COVID-19 and Economic Inequality : Short-Term Impacts with Long-Term Consequences
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 th...
| Main Authors: | , , , , , , , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/219141642091810115/COVID-19-and-Economic-Inequality-Short-Term-Impacts-with-Long-Term-Consequences http://hdl.handle.net/10986/36848 |
| Summary: | 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. |
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