The Unequal Effect of the COVID-19 Pandemic on the Labour Market and Income Inequality in China: A Multisectoral CGE Model Analysis Coupled with a Micro-Simulation Approach

Qi Zhang, Xinxin Zhang, Qi Cui, Weining Cao, Ling He, Yexin Zhou, Xiaofan Li and Yunpeng Fan
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Qi Zhang: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Xinxin Zhang: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Qi Cui: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Weining Cao: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Ling He: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Xiaofan Li: School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
Yunpeng Fan: Institute of Finance & Banking, Chinese Academy of Social Sciences, Beijing 100710, China

IJERPH, 2022, vol. 19, issue 3, 1-21

Abstract: The COVID-19 pandemic had an unequal impact on the employment and earnings of different labourers, consequently affecting households’ per capita income and income inequality. Combining a multisector computable general equilibrium model of China with a micro-simulation approach, this study aims to analyse the unequal effect of the COVID-19 pandemic on China’s labour market and income inequality. The results confirm the unequal impact of the pandemic on the employment and earnings of different labourer types. Labourers who are female, live in urban areas, and have relatively low education levels would suffer greater losses in employment and earnings. The pandemic would reduce household per capita income by 8.75% for rural residents and 6.13% for urban residents. While the pandemic would have a larger negative impact on the employment and earnings of urban labourers, it would have a greater negative impact on the household per capita income of rural residents. Moreover, the per capita income of low-income households is more vulnerable to the pandemic, and the number of residents living below the poverty line would increase significantly. Thus, the pandemic would aggravate income inequality in China and threaten the livelihoods of poor families. This study could inform researchers exploring the distributional effect of the COVID-19 pandemic in developing countries.

Keywords: COVID-19 pandemic; labour market; CGE model; the micro-simulation approach; income inequality (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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