Covid-19 and Global Income Inequality

20 Pages Posted: 27 Jan 2021 Last revised: 29 Jan 2023

See all articles by Angus Deaton

Angus Deaton

Princeton University; National Bureau of Economic Research (NBER)

Date Written: January 2021

Abstract

There is a widespread belief that the COVID-19 pandemic has increased global income inequality, reducing per capita incomes by more in poor countries than in rich. This supposition is reasonable but false. Rich countries have experienced more deaths per head than have poor countries; their better health systems, higher incomes, more capable governments and better preparedness notwithstanding. The US did worse than some rich countries, but better than several others. Countries with more deaths saw larger declines in income. There was thus not only no trade-off between lives and income; fewer deaths meant more income. As a result, per capita incomes fell by more in higher-income countries. Country by country, international income inequality decreased. When countries are weighted by population, international income inequality increased, more in line with the original intuition. This was largely because Indian incomes fell, and because the disequalizing effect of declining Indian incomes was not offset by rising incomes in China, which is no longer a globally poor country. That these findings are a result of the pandemic is supported by comparing global inequality using IMF forecasts in October 2019 and October 2020.

Suggested Citation

Deaton, Angus S., Covid-19 and Global Income Inequality (January 2021). NBER Working Paper No. w28392, Available at SSRN: https://ssrn.com/abstract=3772639

Angus S. Deaton (Contact Author)

Princeton University ( email )

Woodrow Wilson School
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United States
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609-258-5974 (Fax)

HOME PAGE: http://www.wws.princeton.edu/~deaton

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