Oriol Aspachs, Ruben Durante, José García-Montalvo, Alberto Graziano, Josep Mestres, Marta Reynal-Querol, 06 August 2020

The economic crisis from the COVID-19 pandemic may disproportionately affect the most vulnerable segments of the population, creating serious challenges for social cohesion and political stability. This column constructs a high-frequency measure of income inequality using anonymised data from bank records on the wages and public transfers of over three million account holders in Spain. Wage inequality increased by almost 30% during the COVID-19 crisis, mainly due to job losses and wage cuts for low-income workers. However, public transfers were very effective at offsetting most, though not all, of this increase.

Ethan Ilzetzki, 05 August 2020

Pupils in schools across the UK have lost up to 105 days of education due to school closures during the COVID-19 lockdown and a second wave of the pandemic, likely in the autumn, may disrupt education further. This column discusses the latest Centre for Macroeconomics survey, in which the panel predicted that the cost to UK economic growth in the will be minor to moderate. However, the panel was unanimous that school closures will increase inequality, with a large majority of the panel predicting a persistent increase in inequality. The panel also predicted harm to gender equality, with many predicting persistent increases in inequality along gender lines.

Gianluca Violante, 31 July 2020

Most high earners bounce back from recessions. But Gianluca Violante tells Tim Phillips that, for the last 50 years, it has been a different story for low earners. 

Graziella Bertocchi, Arcangelo Dimico, 29 July 2020

COVID-19 pandemic is having a disproportionate impact on African Americans, who are dying at a rate two to three times higher than their population share. This column uses a detailed individual-level dataset from Cook County, Illinois, to explore the relationship between COVID-19 mortality and race. Not only are Black Americans disproportionally affected by COVID-19, but they also started to succumb to it earlier than other groups. Such asymmetric effects can be traced back to racial segregation introduced by discriminatory lending practices in the 1930s.

Qing Hu, Ross Levine, Chen Lin, Mingzhu Tai, 18 July 2020

The financial conditions facing parents can have effects on children’s education outcomes, both in terms of schooling and parental support at home. This column presents evidence from the US, arguing that changes in banking regulation across states can cause changes in the experience of children through a number of channels. These effects are not uniform across household income brackets and can be mitigated when there are other family members such as grandparents that are able to help children with their personal development.

Apostolos Davillas, Andrew M Jones, 30 June 2020

The economic and policy response to COVID-19 has created specific gradients in both exposure to the disease itself and in exposure to the economic impact of the lockdown. This column uses survey data to show that inequality in psychological distress has increased since the pandemic in the UK. However, the proportion of inequality explained by observed individual circumstances has decreased. Pre-pandemic, the largest contributors were financial, employment and housing conditions. By April 2020, age and gender accounted for a larger share, through the impact of the pandemic on mental wellbeing among young people. Working in COVID-affected industries, household composition and parental occupation have also increased their association with the inequality in psychological distress. 

Orsetta Causa, Maria Chiara Cavalleri, 30 June 2020

The Covid-19 pandemic risks exacerbating existing inequalities. This column analyses distributional aspects of the crisis by focusing on non-standard workers, whose limited access to social protection and job retention schemes make them particularly vulnerable to labour market disruptions. The authors discuss which policy actions governments have taken thus far and which policies they can pursue further in order to support vulnerable workers and avert the risk of a pandemic inequality feedback loop.

Caitlin Brown, Martin Ravallion, Dominique van de Walle, 27 June 2020

Recommendations to limit the spread of COVID-19 call for social distancing, washing, and access to information and treatment. However, people need to be in household environments that allow them to follow those recommendations. This column examines the relationship between poverty and the adequacy of the home environment. There is a strong wealth effect both within and between countries, where the poor are less likely to have the kind of dwellings and infrastructure to follow WHO recommendations. Complementary policies to address such inadequate home environments are needed.

David Bloom, Klaus Prettner, 25 June 2020

Over the last decade there has been a tremendous progress in automation. Many tasks previously seen as un-automatable can now be performed without human labour, and the number of industrial robots in use has increased sharply. This column describes the recent trends in automation and argues that its principal effects are to increase output per capita at the expense of rising inequality. Advancing technologies have mainly replaced the routine tasks of low-skilled workers, while the incomes robots generate flow to wealthier capital owners. The current COVID-19 pandemic is likely to reinforce these trends, raising the need for a policy response.

Stefania Fabrizio, Vivian Malta, Marina M. Tavares, 20 June 2020

The COVID-19 crisis is depressing growth globally, and lockdown measures are causing widespread job losses. This column illustrates that women are amongst the worst affected. Women are vulnerable not only because of their jobs, but also because of gender inequalities within housework division, education, and health. There is an urgent need to support women, repair gender disparities aggravated by crisis, and to reduce women’s vulnerability going forward. Gender-responsive fiscal measures are viable tools that work in the interests of women, as well as supporting economic growth and reducing poverty and inequality.

Ken Mayhew, Samuel Wills, 18 June 2020

Inequality within most developed countries is higher today than it was 30 years ago. Growth in emerging economies has reduced inequality between nations, but the benefits have been unevenly spread within those economies. This column analyses what has happened, why we should care, and what can be done about inequality. Governments have not focused enough on pre-market policies that prevent inequality arising in the first place. Post-market interventions should be seen as too little, too late. Instead, we need a call-to-arms for governments to re-focus on the deep underlying drivers of inequality.

Juan C. Palomino, Juan Gabriel Rodríguez, Raquel Sebastian, 16 June 2020

Enforced social distancing and lockdown measures to contain COVID-19 restrict economic activity, especially among workers in non-essential jobs who cannot ‘telework’. These have implications for inequality and poverty. This column analyses the capacity of individuals in 29 European countries to work under lockdown and the potential impact of a two-month lockdown on wages and inequality levels. There will be substantial and uneven wage losses across the board and poverty will rise. Inequality within countries will worsen, as it will between countries although to a lesser extent.

Thomas Plümper, Eric Neumayer, 11 June 2020

Is Covid-19 a ‘rich man’s disease’, as many citizens in poorer countries believe it to be? This column descibes how in Germany, infections began with individuals returning from skiing holidays. In the first phase of the pandemic, infection rates were higher in richer areas and lower in more socially deprived districts. In the second phase, the ability to socially distance oneself mattered more – an ability that is itself socioeconomically stratified. Richer districts are now seeing fewer new infections, and the initial safety advantage of more socially deprived districts has disappeared.

Alina Kristin Bartscher, Moritz Kuhn, Moritz Schularick, 18 May 2020

Household debt-to-income has quadrupled in the US since WWII. This column presents historical evidence suggesting that debt-to-income ratios have risen most dramatically for middle-class households with low income growth. Middle-class households have increasingly tapped into rising housing wealth to finance spending in excess of income. Home-equity based borrowing accounts for 50% of the increase in US housing debt and turned the middle-class into the epicentre of financial fragility. 

R. Maria del Rio-Chanona, Penny Mealy, Anton Pichler, François Lafond, J. Doyne Farmer, 16 May 2020

Many researchers have studied the adverse impacts of the negative supply shock due to measures taken to combat the spread of COVID-19. This column provides estimates of occupation- and industry-specific effects of both the supply and the demand shock for the US. US GDP is predicted to decline by 22% compared to the pre-COVID-19 period, and 24% of US jobs are likely to be vulnerable. The adverse effects are further estimated to be strongest for low-wage workers who might face employment reductions of up to 42% while high-wage workers are estimated to experience a 7% decrease.

Asger Lau Andersen, Emil Toft Hansen, Niels Johannesen, Adam Sheridan, 15 May 2020

The COVID-19 pandemic has had drastic effects on consumer spending across the world. This column presents evidence based on bank account transaction data from Denmark showing that total card spending was reduced by 25% during the early phase of the crisis. The drop was mostly concentrated on goods and services whose supply is directly restricted by government interventions, suggesting a limited role for spillovers to non-restricted sectors through demand in the short term.

Davide Furceri, Prakash Loungani, Jonathan D. Ostry, Pietro Pizzuto, 08 May 2020

Major epidemics in this century have raised income inequality and hurt the employment prospects of people with low educational attainment, while scarcely affecting those with advanced degrees. This column argues that the COVID-19 pandemic could have similar distributional consequences unless this time is different and government policies end up being effective in raising boats more than yachts.

Leandro de la Escosura, Carlos Álvarez-Nogal, Carlos Santiago-Caballero, 07 May 2020

It is believed that living standards in world economies stayed roughly constant prior to 1800. This column presents data on Spanish population and economic development from 1277-1850 which challenges this view. Population and economic growth are found to evolve simultaneously, contradicting the Malthusian view. Spain was a frontier economy within Europe that, after a drop in living standards after the Black Death, grew steadily until the 1570s, when its path diverged from the rest of Europe. 

Morten Bennedsen, Elena Simintzi, Margarita Tsoutsoura, Daniel Wolfenzon, 07 May 2020

Many countries are introducing mandatory wage transparency to address the seemingly intractable gender wage gap, but evidence of its effects on gender pay disparities and firm outcomes has, to date, been limited. To examine the benefits and costs of such policies, this column analyses the wages of firms prior to and following the introduction of Denmark’s 2006 Act on Gender Specific Pay Statistics. Mandatory transparency legislation reduced gender pay disparity, primarily by slowing down the growth of men's wages.

Dimitris K. Chronopoulos, Marcel Lukas, John O.S. Wilson, 06 May 2020

Since the first COVID-19 cases were reported in January 2020, the UK government has introduced successive public health measures, culminating in late March 2020 with enforced closures of non-essential businesses and social distancing. These measures are significantly affecting UK household incomes and expenditures. This column exploits a large anonymised transaction-level dataset covering Great Britain to examine real-time consumer spending responses to the COVID-19 pandemic and related public policy measures. While there are differences by age, gender, and income level, overall consumer spending declined as the government lockdown becames imminent and has continued to decline since.

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