COVID-19 and Economic Inequality: Short-Term Impacts with Long-Term Consequences

Ambar Narayan, Alexandru Cojocaru, Sarthak Agrawal, Tom Bundervoet, Maria Eugenia Davalos, Natalia Garcia, Christoph Lakner, Daniel Gerszon Mahler, Veronica Sonia Montalva Talledo, Andrey Ten and Nishant Yonzan

No 9902, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the short-term implications of the COVID-19 pandemic for inequality in developing countries. The analysis takes advantage of high-frequency phone survey data collected by the World Bank to assess the distributional impacts of the pandemic through the channels of job and income losses, food insecurity, and children’s education in the early days of the pandemic and subsequent period of economic recovery leading up to early 2021. It also introduces a methodology for estimating changes in income inequality due to the pandemic by combining data from phone surveys, pre-pandemic household surveys, and macroeconomic projections of sectoral growth rates. The paper finds that the pandemic had dis-equalizing impacts both across and within countries. Even under the assumption of distribution-neutral impacts within countries, the projected income losses are estimated to be higher in the bottom half of the global income distribution. Within countries, disadvantaged groups were more likely to have experienced work and income losses initially and are recovering more slowly. Inequality simulations suggest an increase in the Gini index for 29 of 34 countries in the sample, with an average increase of about 1 percent. Although these short-term impacts on inequality appear to be small, they suggest that projections of global poverty and inequality impacts of COVID-19 under the assumption of distribution-neutral changes within countries are likely to underestimate actual impacts. Finally, the paper argues that the overall inequality impacts of COVID-19 could be larger over the medium-to-long term on account of a slow and uneven recovery in many developing countries, and disparities in learning losses during pandemic-related school closures, which will likely have long-lasting effects on inequality of opportunity and social mobility.

Keywords: Educational Sciences; Inequality; Labor Markets; Poverty Reduction Strategies (search for similar items in EconPapers)
Date: 2022-01-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://documents.worldbank.org/curated/en/21914164 ... erm-Consequences.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9902

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().