Impact of pandemics on income inequality: lessons from the past

Pinaki Das, Santanu Bisai and Sudeshna Ghosh

International Review of Applied Economics, 2021, vol. 35, issue 6, 832-850

Abstract: This paper examines how past pandemics impacted income inequality measured through the Gini measure of inequality net of taxes. It explores how five major pandemics, namely, SARS in 2003, H1N1 in 2009, MERS in 2012, Ebola in 2014, and Zika in 2016 impacted the distribution of income across high income, upper-middle-income and lower-middle-income countries. How the inequality across quintiles share in income is impacted was explored. We used comprehensive panel data sets covering annual observations from 1995 to 2017 for 70 countries. The generalized least square estimation shows that the pandemics have a statistically significant positive impact upon income inequality particularly for the high-income group and also for the entire set of 70 countries. However, the impact of the pandemics is negative upon the upper-middle-income group of countries. The estimation is robust controlling for additional macroeconomic variables. The study demonstrates that past pandemics may generate a policy response that impacts the distribution of income. A weakened role of the state has been responsible for worsening inequality.

Date: 2021
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DOI: 10.1080/02692171.2021.1921712

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