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October 2020 Newsletter

How has inequality evolved over time?

Inequality has varied over time—currently, it’s at the highest level for 80 years in the United States and that also seems to be true in much of Western Europe.

The ramifications for health and economic security during the current pandemic have been greater for some people than for others. The global impact of Covid-19 suggests that existing inequalities can deepen and it is of paramount importance for policymakers to prevent longstanding inequalities from becoming worse.

So how can we measure inequality? In her article, Measuring income inequality, Ija Trapeznikova examines the variety of measures available and their usefulness:

The Lorenz curve is a commonly used metric that allows for the quick and visual comparison of inequality across countries. However, if the Lorenz curves cross they cannot provide a conclusive ranking between distributions.
The Gini coefficient uses information from the entire income distribution and is independent of the size of a country’s economy and population. It values change depending on what is measured—wages, before—or after—tax income, wealth, or consumption.
The Interdecile ratio is the 90–10 ratio, which shows the income level of individuals at the top of the income distribution (top 10%) relatively to the income level of those at the bottom of the distribution (bottom 10%). However, the downside of using interdecile ratios is that they ignore incomes between percentiles, as well as above the highest and below the lowest percentile.
The Palma ratio represents a ratio of the income of the richest 10% of the distribution to those in the bottom 40%. For instance, if policymakers care more about what happens to the poor they should use the Palma ratio instead of the Gini coefficient as their inequality measure and focus on consumption instead of income data.
The Theil index can decompose inequality into within- and between-group inequality. The Theil index is less intuitive and not directly comparable across populations with different sizes or group structures.

Read Ija Trapeznikova's article:
Measuring income inequality

For commentary on the effects of Covid-19 see
Covid-19: Pandemics and the labor market.

See National responses to Covid-19 for content looking at the effects
of the pandemic on individual countries or cities.

Does increasing the minimum wage reduce poverty in developing countries?

by T. H. Gindling

Poverty persistence and poverty dynamics

by Martin Biewen

Measuring income inequality

Editor-in-chief Professor Dan Hamermesh interviewed:

Ija Trapeznikova

on measuring income inequality

Stijn Broecke

on automation and the future of jobs

Lorenzo Cappellari

on income inequality and social origins

Roberto Dell'Anno

on inequality and informality in transition and emerging countries

View the full playlist on inequality here.

Read our latest news stories:

Young people and furloughed ethnic minorities hit hardest by job losses

Only one in three young people, who lost their jobs, has found a new role.

Background and wealth heavily impact educational success, Australian study finds

Crucially, the data shows that those who come from disadvantaged backgrounds fall through the cracks.

Chile voted to rewrite its constitution

With almost all the ballots counted, 78% of people had voted in favor of a new constitution.

More than half of small European firms at risk of closure

The survey was conducted in August, before the acceleration in Covid-19 cases.

School re-openings in Germany found not to have increased coronavirus case numbers

Hygiene measures in German schools worked well to contain the spread of the virus.

Covid-19 causes dramatic rise in demand for child labor in India

In only seven months India has been set back decades in the fight against child labor, child trafficking, and child marriage.

Unemployment rate in the UK hits its highest levels in three years

In the three months leading to August, the unemployment rate rose 4.5%, compared with 4.2% previously.

Singapore to offer baby bonus to combat potential coronavirus fertility slump

Singapore to offer baby bonus to combat potential Covid-19 fertility slump

Deputy Prime Minister Heng Swee Keat acknowledged that the “path to recovery [from the pandemic] will not be easy.”

Australia’s Canberra college program offers teen mothers help to finish high school

Canberra’s CC Cares program is Australia’s only stand-alone centre designed for those who decide to start a family early.

UK government explores processing asylum claims overseas

Foreign Office officials have been asked to consider the option of sending asylum seekers to detention facilities overseas.

Upcoming events:

IZA Workshop: Labor Markets and the Phillips Curve: What Has Changed in the Past 60 Years?, Nov 20-21 2020, Online
10th Annual International Conference on Immigration in OECD Countries, Dec 07-08 - OECD Conference Centre, Paris
World Employment Conference 2020: Steering a labour market in transformation, Sept 07-08 2021 - Madrid, Spain

Read some of our recent commentaries:

The impact of Covid-19 restrictions on small businesses in the US

No group was immune to negative impacts of social distancing policy mandates and demand shifts.

What are lockdowns good for?

Policymakers were left with few policy options to combat the spread of the virus and minimize the economic damage that it entailed.

Labor issues in the US election

No issue dealing with policy involving labor has surfaced during this presidential election season.

Covid-19 and US attitudes toward government and markets

Stay-at-home orders, mandated shutdowns, and relief packages that might have seemed unthinkable mere weeks before were adopted.

Excess deaths in care homes during the pandemic

Forgotten numbers: Non-fatal Covid-19 infections in the US

Suppression of Covid-19 infection spread is about more than just reducing current medical care costs and ultimate fatalities.

Excess deaths in care homes during the pandemic

Transmission of Covid both within and from contacts with care homes was a major source of the vector of Covid-19.

Human mobility during the pandemic: Policy or information?

Overall, government-imposed measures are the driving force behind the decline in human mobility and the associated economic activity.

Economic effects of Covid-19: The importance of credit constraints

The data suggest that the Covid-19 outbreak reduced expected sales growth and increased the prices that firms expected to charge.

All in this together? Inequality during Covid-19

Covid-19 has caused disproportionate employment and health losses for workers whose jobs cannot be conducted remotely.

Cognitive performance in the home office—What professional chess can tell us

A crucial question for companies is how workers’ productivity changes in the home office compared to the regular office.

Covid-19 shutdowns and the self-employed

Mothers have been particularly burdened; consequently, many years of gains in women’s labor market position may have been undone by these shutdowns.

Racial and ethnic disparities in the face of the coronavirus

The urgency of the racial issue has been widely acknowledged within the medical literature that focuses on clinical outcomes.

The power of social capital during a pandemic

Social capital is a key factor for the successful containment of a public health emergency, especially in the absence of lockdown policies.

You can find more commentaries
on our opinion page

Articles relating to pandemics and the labor market:

To read more, consult our key topic page Covid-19—
Pandemics and the labor market.

Latest articles

All one-pagers are also available to read and download in German. Find out more.

One-pagers are now available in Spanish. Take a look at the Spanish key topics page.

The Covid-19 pandemic is likely to have lasting economic and social impacts on employment, income, and working conditions in labor markets around the world.

IZA has therefore invited a number of experts to monitor individual countries' crisis responses on their
Crisis Response Monitoring site:

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Read Ija Trapeznikova's article: Measuring income inequality

For commentary on the effects of Covid-19 see Covid-19: Pandemics and the labor market. See National responses to Covid-19 for content looking at the effects of the pandemic on individual countries or cities.

Related articles:

Measuring income inequality Editor-in-chief Professor Dan Hamermesh interviewed: