How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

Emerging markets and developing economies grew consistently in the two decades before the COVID-19 pandemic hit, allowing for much-needed gains in poverty reduction and life expectancy. The crisis now puts much of that progress at risk while further widening the gap between rich and poor.

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies
How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies – www.brandspurng

Despite the pre-pandemic gains in poverty reduction and lifespans, many of these countries have struggled to reduce income inequality. At the same time, they saw persistently high shares of inactive youth (i.e., not in employment, education, or training), wide inequality in education, and large gaps remaining in economic opportunities for women. COVID-19 is expected to make inequality even worse than past crises since measures to contain the pandemic have had disproportionate effects on vulnerable workers and women.

As part of our latest World Economic Outlook, we explore two facts about the current pandemic to estimate its effect on inequality: a person’s ability to work from home and the drop in GDP expected for most countries in the world.

The impact of where you work

- Advertisement -

First, the ability to work from home has been key during the pandemic. A recent IMF study shows that the ability to work from home is lower among low-income workers than for high-income earners. Based on data from the United States, we know that sectors with activities more likely to be performed from home saw a smaller reduction in employment. These two facts combined tell us that lower-income workers were less likely to be able to work from home and more likely to lose their jobs as a result of the pandemic, which would worsen the income distribution.

Second, we use the IMF’s GDP growth projections for 2020 as a proxy for what the aggregate decrease in income will be. We distribute this loss across income brackets in proportion to their ability to work from home. With this new income distribution, we compute a post-COVID summary measure of income distribution (Gini coefficient) for 2020 for 106 countries and compute the percent change. The higher the Gini coefficient, the greater the inequality, with high-income individuals receiving much larger percentages of the total income of the population.

What this tells us is the estimated effect from COVID-19 on the income distribution is much larger than that of past pandemics. It also provides evidence that the gains for emerging market economies and low-income developing countries achieved since the global financial crisis could be reversed. The analysis shows that the average Gini coefficient for emerging market and developing economies will rise to 42.7, which is comparable to the level in 2008. The impact would be larger for low-income developing countries despite slower progress since 2008.

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies

- Advertisement -

 Welfare will suffer

This widening inequality on average has a clear impact on people’s well-being. We assess the progress made before the pandemic and what we can expect for 2020 in terms of welfare using a measure that goes beyond GDP. We use a welfare measure that combines information on consumption growth, life expectancy, leisure time, and consumption inequality. Based on these measures, from 2002 to 2019, emerging markets and developing economies enjoyed welfare growth of almost 6 percent, which is 1.3 percentage points higher than per capita real GDP growth, suggesting many aspects of peoples’ lives were seeing improvement. The increase was mostly due to improvements in life expectancy.

The pandemic could reduce welfare by 8 percent in emerging markets and developing countries with more than half of it stemming from the excess change in inequality as a result of a person’s ability to work from home. Note that these estimates do not reflect any income redistribution measures after the pandemic. This means that countries can dampen the effect on inequality and on welfare more generally by policy actions.

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies

- Advertisement -

 What can we do about it?

In our latest World Economic Outlook, we outlined some policies and measures to support affected people and firms that will be essential for keeping the inequality gap from widening further.

Investment in retraining and reskilling programs can boost reemployment prospects for adaptable workers whose job duties may see long-term changes as a result of the pandemic. Meanwhile, expanding access to the internet and promoting financial inclusion will be important for an increasingly digital world of work.

Relaxing eligibility criteria for unemployment insurance and extending paid family and sick leave can also cushion the impact the crisis is having on jobs. Social assistance in the form of conditional cash transfers, food stamps, and nutrition and medical benefits for low-income households must not be withdrawn prematurely.

Policies to prevent decades of hard-won gains from being lost will be critical to ensuring a more equitable and prosperous future beyond the crisis.

- Advertisement -
How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand SpurHow COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand SpurHow COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur

Latest News

Four 12 Year Old Students To Tackle Hong Kong’s Longest Trail to Raise Funds for The Child Development Centre (CDC) for Children with Special...

HONG KONG SAR - Media OutReach - 9 March 2021 - From 27 to 29 March 2021, four secondary school students will challenge themselves to complete the longest trail in Hong Kong - the 100km MacLehose trail. Their aim is to raise essential funds for The Child Development Centre (CDC), a non-profit organisation that supports children with special educational needs. Please support and donate to this cause at https://www.simplygiving.com/100km-hike-for-special-needs

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur


Jack, Jaden, Gabriel, and Martin are year-12 students at an international school in Hong Kong. The hike they will complete is not only daunting in length, but also challenging due to the elevation of 5,053 metres. The students chose the CDC as the sole beneficiary as Jack's younger sister previously attended an early intervention programme there. "This organisation (the CDC) is very close to Jack's heart, as he has a younger sister with Down's Syndrome, and understands the difficulties that families face when raising and educating special needs children to reach their full potential, which is something that every child deserves.

"Money donated to the CDC will go towards programme and service expenses, allowing them to aid even more families, and provide even better care with their top notch teaching specialists and therapists. Furthermore, it is no doubt that under the current COVID-19 pandemic, non-profit organisations like this will be impacted the most, so any money donated will be especially helpful now more than ever. We would really appreciate your support on our journey and cause!"

Dr. Yvonne Becher, the Chief Executive of the CDC, expressed her gratitude to the students for organising this meaningful event, "we are grateful for Jack's and his team's initiative, and are glad that the CDC's work is being recognised and has created such positive value to families throughout the years. Hope everyone can also feel the love and faith that Jack has for his sister, and spread the positive energy to many other children with additional needs in our society."

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur


Based on each child's needs, the CDC's multidisciplinary team offers services such as assessments, early intervention programmes, speech therapy, occupational therapy, and targeted support programmes addressing social skills, sensory processing, attention, behaviour, early literacy and numeracy, and more. The CDC is also committed to supporting parents and professionals through counselling services, outreach screening, and child development training.


This press release is distributed by The Child Development Centre and supported by Media OutReach Newswire

About The Child Development Centre:

Igniting Learning Journeys - One Child at a Time

The Child Development Centre (CDC) is a non-profit education, assessment and therapy provider for children of early childhood age (0 - 8) with a wide spectrum of additional learning or developmental needs. We envision that every child will succeed in their unique learning journey and are missioned to provide quality learning experiences for the individual child and empower their families. The CDC is one of only two government-supported Early Education and Training Centres (EETCs) in Hong Kong which provide programmes and services in both English and Chinese, serving more than 400 children per year.

Address: 4/F, Prime Mansion, 183-187 Johnston Road, Wan Chai, Hong Kong

T 3462 2875 | F 2849 6900 | www.cdchk.org

How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -How COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand SpurHow COVID-19 will Increase Inequality in Emerging Markets and Developing Economies - Brand Spur