Intensified inequalities: The unequal Covid response has not helped to level global inequalities in income or wealth

By Atanu Biswas

As Lizzie Wade perceived in her May 2020 article in Science magazine, inequality has made historic pandemics “worse than they needed to be,” as marginalized people suffer the most. Similarly, Oxfam’s recent report, Enjoying the Pain, released at the World Economic Forum’s Davos conference in May, painted a bleak picture of deepening global inequality due to the pandemic that is only happening. once a century. He says the pandemic has created a new billionaire every 30 hours, and in 2022 a million more people will fall into extreme poverty every 33 hours. Wider global inequality, perhaps in a different quantum, is also described in reports from other global organizations. While the fanciful numbers in these reports and the quantum of inequality depicted are still the subject of deeper introspection and debate, and the underlying data and methodologies are often the subject of concern, it is undeniable that the Overall global inequality has been deepened by Covid-19.

Various researchers argue that the direct impact of the pandemic on income distribution is closely linked to the fact that the spread of a deadly virus in a society leads to the death of large numbers of workers, because poor and low-income groups income are the most vulnerable to disease. After the appearance of Covid, Davide Furceri and his co-authors at the IMF studied the impact of five epidemics of this century, namely SARS (2003), H1N1 (2009), MERS (2012), Ebola ( 2014) and Zika (2016) to observe that these events have led to an increase in inequalities in the countries covered by the research. Additionally, in a 2021 article in SN Business & Economics, two researchers from Huazhong University of Science and Technology, Wuhan, China, examined historic pandemics such as the Spanish flu (1918-20), Asian flu (1957-58), Hong Kong influenza (1968-69) and H1N1, and found that these pandemics actually increased income inequality.

Is the widening of inequalities then the ultimate effect of pandemics? Not really! Research and analysis of historical data by economists like Thomas Piketty and Guido Alfani with their co-authors show that inequality was in fact leveled in Europe by at least three disastrous events over the past seven centuries – the plague of the 14th century , the Black Death and the two Wars. The Black Death is perhaps the only major pandemic on record that has led to a leveling of income inequality, as seen in data from northwest Italy, Spain and England. From 1347 to 1352, the Black Death killed about half of all Europeans and thus made labor scarce and increased real wages. There was an unusual abundance of goods, which led to a reduction in income and wealth inequality.

It would be absolutely wrong to postulate that pandemics, in general, have the power to (brutally) level inequalities, even if the pandemic is caused by the same pathogen. The pandemics of the following centuries unfolded in different institutional environments and labor market effects. The plagues of the 17th century, for example, did not have the same economic effects as the Black Death. In fact, as pandemics became inevitable, the elite found ways to preserve their wealth and even their health.

It would be important to note the effect of the Spanish Flu – an influenza pandemic and perhaps the closest equivalent of Covid-19. Incidentally, people crudely believe that the Spanish flu led to increased poverty and income inequality. One serious reason is that the Spanish flu’s age-specific mortality curve was W-shaped, meaning that the number of deaths among people aged 15 to 44 was high. Yet, it must be remembered that the economic legacy of the Spanish flu is quite hazy. Admittedly, its impact on inequality is widely confused with that of the First World War, and it is simply impossible to disentangle the effects of the two. Guido Alfani, an economic historian from Bocconi University in Milan, also noted this.

And the Covid then? As early as 2020, the aforementioned IMF team perceived that Covid would increase inequality if past pandemics were any guide. The SN Business & Economics paper, however, argued that the characteristics of Covid-19 are such that deaths are highly concentrated in older age groups and neither a labor shortage can be expected. nor a sharp drop in productivity due to the Covid pandemic. We might have expected a reduction in consumption, opportunities for savings, high unemployment rates, high public debt ratios. These authors, however, doubted the ultimate effects of Covid-19 on inequality, as they believed that some of its inherent characteristics push for increased inequality, while others push for narrowing the income gap.

But, as we see now, the ongoing pandemic has of course triggered huge unemployment, especially among the poorest. The prolonged global lockdown, uneven distribution of vaccines, and an uneven global Covid response that generated more yachts than boats have certainly not helped to level global inequalities in income or wealth. No wonder the economic recovery in many countries is K-shaped. And global inequality may have been destined to widen in the aftermath of the Covid-19 crisis. The exact image, however, may remain unknown.

The author is Professor of Statistics, Indian Statistical Institute, Kolkata

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