Working Paper: CEPR ID: DP16366
Authors: Martin Eichenbaum; Sergio Rebelo; Mathias Trabandt
Abstract: We argue that the Covid epidemic disproportionately affected the economic well-being and health of poor people. To disentangle the forces that generated this outcome, we construct a model that is consistent with the heterogeneous impact of the Covid recession on low- and high-income people. According to our model, two thirds of the inequality in Covid deaths reflect pre-existing inequality in comorbidity rates and access to quality health care. The remaining third, stems from the fact that low-income people work in occupations where the risk of infection is high. Our model also implies that the rise in income inequality generated by the Covid epidemic reflects the nature of the goods that low-income people produce. Finally, we assess the health-income trade-offs associated with fiscal transfers to the poor and mandatory containment policies.
Keywords: epidemic; inequality; recession
JEL Codes: E1; I1; H0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| preexisting inequalities in comorbidity rates and healthcare access (I14) | observed disparities in COVID deaths (I14) |
| preexisting health conditions (I12) | higher mortality rates among low-income individuals (I14) |
| healthcare access (I14) | higher mortality rates among low-income individuals (I14) |
| occupational exposure to COVID risks (J28) | higher mortality rates among low-income individuals (I14) |
| income inequality (D31) | health outcomes (I14) |
| high-risk work environments (J28) | increased risk of infection among low-income individuals (I32) |
| income inequality due to COVID epidemic (D31) | nature of goods produced by low-income individuals (F61) |
| government transfers to low-income households (H53) | death toll (J17) |