Inequality in India Declined During Covid
54 Pages Posted: 27 Dec 2021 Last revised: 14 Nov 2024
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Inequality in India Declined during COVID
Date Written: December 2021
Abstract
We use a large, representative panel data set from India with monthly data on household finances to examine the incidence of economic harms during the COVID pandemic. We observe a sharp spike in poverty, peaking during India's sharp but short lockdown. However, there was a striking decrease in income inequality outside the lockdown. There was a smaller decrease in consumption inequality, likely due to consumption smoothing. Evidence supports two mechanisms for the decline in income inequality: the capital income of top-quartile earners covaries more with aggregate income, and demand for labor fell more for higher quartiles.
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