Working Paper: NBER ID: w29063
Authors: Martin S. 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: COVID-19; Inequality; Health Economics
JEL Codes: E1; H0; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Low-Wage Workers Employment Conditions (J81) | Health Outcomes (I14) |
| Nature of Goods Produced by Low-Income Workers (F61) | Income Inequality (D31) |
| Government Transfers (H29) | Income Inequality (D31) |
| Government Transfers (H29) | COVID Deaths (I12) |
| Income Inequality (D31) | COVID Deaths (I12) |