COVID-19 and Global Income Inequality.

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 GDP per capita. At least after the fact, 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, in line with the original intuition. This was largely because Indian GDP 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. These results concern GDP per capita and say little or nothing about the global distribution of living standards, let alone about the global distribution of suffering during the first year of the pandemic.