 Economic Disasters and InequalityNo 202255, Working Papers from University of Pretoria, Department of Economics Abstract: This paper analyses the dynamic effects of economic disasters, captured by cumulative decline in output of at least 10 percent over 1 or more years, on disposable income inequality of a sample of 99 countries over the annual period of 1960 to 2017. Based on impulse response functions derived from a robust local projections method, we find that economic disasters increase inequality by 4%, with the overall effect being statistically significant and highly persistent over a period of 20 years following the shock. When we repeat the analysis by categorizing the 99 countries based on income groups and regions, we find that the strongest effects are felt by high-income countries (8%), and in Europe, Central Asia and North America (16%) taken together, as primarily driven by ex-socialist economies. Though of lesser magnitude, statistically significant increases in inequality are also observed for low-, and upper-middle-income economies, and the regions of Latin America and Caribbean, Middle East and North Africa (MENA) and South Asia, and to some extent also for Sub-Saharan Africa. Our findings have important policy implications. Keywords: inequality; economic disasters; local projection method (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:202255 Access Statistics for this paper More papers in Working Papers from University of Pretoria, Department of Economics Contact information at EDIRC. |
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