Pandemics and income inequality: a historical review

Adham Sayed () and Peng Bin ()
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Adham Sayed: Huazhong University of Science and Technology

SN Business & Economics, 2021, vol. 1, issue 4, 1-17

Abstract: Abstract This paper examines the effects of pandemics on income inequality, specifically those pandemics that claimed more than 100,000 lives. Given that pandemics are events that rarely occur, we have use data spanning over the last 100 years (1915–2017) and relating to four pandemics. The study includes four countries that had income inequality data covering that period. Using panel data methods—fixed effects and augmented mean group estimators—we found a significant effect of these pandemics on declining income inequality. The study argues that based on the characteristics of the COVID-19 pandemic, namely that fatalities are highly concentrated in older age groups, we can neither expect a labor scarcity nor a sharp decline in productivity; however, we could expect a reduction in consumption, the possibility of savings, high unemployment rates, and high public debt ratios. The ultimate effects of COVID-19 on inequality remain unclear so far, as some of its inherent characteristics push for an increase in inequality. In contrast, others push toward a narrowing of the income gap.

Keywords: Income inequality; Pandemic; COVID-19; Factors model; Macro panel data (search for similar items in EconPapers)
JEL-codes: C38 I14 N32 N34 O15 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s43546-021-00059-4

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