Wage inequality and poverty effects of lockdown and social distancing in Europe

  1. Juan C. Palomino 1
  2. Juan G. Rodríguez 2
  3. Raquel Sebastián Lago 2
  1. 1 University of Oxford
    info

    University of Oxford

    Oxford, Reino Unido

    ROR https://ror.org/052gg0110

  2. 2 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

Revista:
Documentos de Trabajo (ICAE)

ISSN: 2341-2356

Año de publicación: 2020

Número: 3

Páginas: 1-41

Tipo: Documento de Trabajo

DIALNET GOOGLE SCHOLAR lock_openDocta Complutense editor

Otras publicaciones en: Documentos de Trabajo (ICAE)

Resumen

The “social distancing” measures taken to contain the spread of COVID-19 impose economic costs that go beyond the contraction of GDP. Since different occupations are not equally affected, this supply shock may have distributional implications. Here, we evaluate the potential impact of enforced social distancing on wage inequality and poverty across Europe. We compute a Lockdown Working Ability (LWA) index which represents the capacity of individuals to work under a lockdown given their teleworking index −that we obtain for European occupations using 2018 EU-LFS− and whether their occupation is essential or closed. Combining our LWA index and 2018 EU-SILC, we calculate individuals’ potential wage losses under six scenarios of lockdown. The Lockdown Incidence Curves show striking differential wage losses across the distribution, and we consistently find that both poverty and wage inequality rise in all European countries. These changesincrease with the duration of the lockdown and vary with the country under consideration. We estimate an increase in the headcount index of 3 percentage points for overall Europe, while the mean loss rate for the poor is 10.3%, using the 2 months lockdown simulation. In the same scenario, inequality measured by the Gini coefficient increases 2.2% in all Europe, but more than 4% in various countries. When we decompose overall inequality in Europe into between- and within-countries components, both elements significantly increase with the lockdown, being the change of the latter more important.

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Información de financiación

The authors acknowledge funding from Citi for the Inequality and Prosperity programme at INET at the Oxford Martin School (Palomino) and from the Ministerio de Ciencia e Innovación under project PID2019-104619RB-C42, COTEC Foundation and Comunidad de Madrid under project H2019/HUM-5793-OPINBI-CM (Rodríguez and Sebastián)

Financiadores

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