Consumption Inequality, Life-Cycle Risk Sharing and the COVID-19 Crisis in a Developing Economy: Evidence from Thailand, Indonesia and Vietnam

Mutita Ariyavutikul, Minchung Hsu, Trang Le and Trisukon Sawatrukkiat

No 251, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper examines life-cycle patterns of earnings and consumption inequality in a developing economy, focusing on employment informality, risk sharing, and the impacts of the COVID-19 pandemic. Using household survey data from Thailand, with robustness checks for Indonesia and Vietnam, we find that in Thailand both earnings and consumption inequality rise with age during prime working years, and earnings inequality continues to increase after retirement. Inequality patterns differ by employment status: formalworker- headed households show limited risk sharing at younger ages, while informal-worker-headed households display flatter consumption-inequality profiles, with consumption inequality generally below earnings inequality. During the COVID-19 period, overall inequality declined, but consumption inequality increased among younger households. Finally, a standard life-cycle model calibrated to match earnings inequality fails to replicate the observed age profile of consumption inequality, suggesting that key developing-economy features, such as informal insurance mechanisms, are not fully captured.

Keywords: Life-cycle inequality; Risk sharing; Informal employment; Developing economy; COVID-19 crisis (search for similar items in EconPapers)
JEL-codes: D31 E21 J46 O15 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2026-05
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