<p>We analyze the relationship between income inequality, redistribution, and the stringency of government-imposed lockdowns during the Covid-19 pandemic. Using daily data from 148 countries, we estimate the elasticity of lockdown stringency with respect to the virus’s reproduction rate. We find robust evidence that countries with lower pre-pandemic disposable income inequality or greater pre-pandemic income redistribution implemented stricter lockdowns in response to the same severity of the outbreak. We then interpret our results through the lens of a stylized economic model with heterogeneous agents, in which countries differ in their capacity for redistribution. Theoretically, we show that a higher cost of redistribution can make the trade-off between lives and livelihoods more severe, particularly when income redistribution has a limited impact on labor supply decisions. Our results therefore suggest that, by influencing policymakers’ incentives to impose less stringent lockdowns, existing inequalities may have exacerbated the effects of the pandemic.</p>

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Covid-19 lockdowns under imperfect redistribution: cross-country stylized facts and theory

  • Joshua Lawrence,
  • Jacek Rothert

摘要

We analyze the relationship between income inequality, redistribution, and the stringency of government-imposed lockdowns during the Covid-19 pandemic. Using daily data from 148 countries, we estimate the elasticity of lockdown stringency with respect to the virus’s reproduction rate. We find robust evidence that countries with lower pre-pandemic disposable income inequality or greater pre-pandemic income redistribution implemented stricter lockdowns in response to the same severity of the outbreak. We then interpret our results through the lens of a stylized economic model with heterogeneous agents, in which countries differ in their capacity for redistribution. Theoretically, we show that a higher cost of redistribution can make the trade-off between lives and livelihoods more severe, particularly when income redistribution has a limited impact on labor supply decisions. Our results therefore suggest that, by influencing policymakers’ incentives to impose less stringent lockdowns, existing inequalities may have exacerbated the effects of the pandemic.