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The unequal inequality impact of the COVID-19 pandemic

Summary:
Less-educated workers have suffered most from job losses in the COVID-19 pandemic, and it is quite likely there was a significant increase in European Union income inequality in 2020. By: Zsolt Darvas Date: March 30, 2021 Topic: European Macroeconomics & Governance The author is grateful for comments and suggestions to conference and seminar participants at Bruegel, Institute of Economics of the Corvinus University of Budapest, Rajk College, and the 15th Conference on Social Monitoring and Reporting in Europe. GDP contractions are typically associated with within-country income inequality increases. While official income inequality data for 2020 will not be available for about two years, the already available employment data for 2020 shows that the difference between

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Less-educated workers have suffered most from job losses in the COVID-19 pandemic, and it is quite likely there was a significant increase in European Union income inequality in 2020.

By: Date: March 30, 2021 Topic: European Macroeconomics & Governance

The author is grateful for comments and suggestions to conference and seminar participants at Bruegel, Institute of Economics of the Corvinus University of Budapest, Rajk College, and the 15th Conference on Social Monitoring and Reporting in Europe.

GDP contractions are typically associated with within-country income inequality increases. While official income inequality data for 2020 will not be available for about two years, the already available employment data for 2020 shows that the difference between highly-educated and low-educated people in terms of job losses is correlated with the economic shock from the COVID-19 pandemic, suggesting that the depth of the economic recession is related to the increase in within-country income inequality in 2020. Scenarios based on historical patterns of recessions and within-country income inequality increases suggest relatively small increases in global income inequality in 2020.

Factors mitigating global inequality increases in 2020 include larger GDP per-capita declines in richer advanced countries than in poorer emerging and developing countries, and the positive GDP growth of China, which suggests that within-country inequality in the world’s most populous country might have not changed much in 2020. In contrast, it is quite likely there was a significant increase in European Union income inequality in 2020, partly reversing the decline during the previous decades.

Recommended citation:

Darvas, Z. (2021) ‘The unequal inequality impact of the COVID-19 pandemic’ Working Paper 06/2021, Bruegel

Zsolt Darvas
Zsolt Darvas joined Bruegel as a Visiting Fellow in September 2008 and continued his work at Bruegel as a Research Fellow from January 2009, before being appointed Senior Fellow from September 2013. He is also a Research Fellow at the Institute of Economics of the Hungarian Academy of Sciences and Associate Professor at the Corvinus University of Budapest.

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