Discussion Paper Details

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Title: Inequality in Life and Death

Author(s): Martin Eichenbaum, Sérgio Rebelo and Mathias Trabandt

Publication Date: July 2021

Keyword(s): Epidemic, Inequality and Recession

Programme Area(s): Macroeconomics and Growth

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.

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Bibliographic Reference

Eichenbaum, M, Rebelo, S and Trabandt, M. 2021. 'Inequality in Life and Death'. London, Centre for Economic Policy Research.