COVID-19's Effects on Global Income Inequality

Do countries with higher levels of income inequality have higher levels of COVID-19 cases?

As the COVID-19 global pandemic continues to surge on, infection rates in countries continue to climb. But this phenomenon has also revealed significant disparities between countries’ income inequalities. Is there a significant relationship between the amount of income inequality within a country and the number of COVID-19 cases it has? 

Elevator Pitch:

Various regions of the world have begun to announce a second round of lockdowns in order to protect their borders and their citizens from the coronavirus. Meanwhile, other regions have begun opening back up and resuming life as usual. Does a further look at the income inequality between both types of countries explain why infection rates are higher in some countries versus others? 

Author’s main message: 

The COVID-19 pandemic has exacerbated the gap between the poor and the rich. Those at the bottom of the socioeconomic ladder face poverty and barriers to quality healthcare. Thus, higher levels of income inequality within countries could possibly explain why they have higher rates of COVID-19 cases than those with lower levels of income inequality. 

Income Inequality and COVID-19:

Europe has announced a second lockdown as COVID-19 cases continue to surge within many cities in Germany and Italy. This is accompanied by a global rise in cases, especially within the United States, and has resulted in the closure of  many restaurants and strict restrictions on the number of customers in grocery stores. At the same time, vast discrepancies among minorities and the poor are being revealed as the world continues to trudge on during this pandemic. According to the Organization for Economic Cooperation and Development, the wealth gap between the rich and the poor is as high as it has been in 30 years. Some countries have reaped the benefits of globalization and made drastic improvements in living conditions. Other countries quickly fell behind and continue to fall even further behind their wealthier counterparts as they fail to achieve sustainable economic growth. Inequality has also increased within countries. There are regional differences, racial differences, and gender differences.   

Those at the top of the socioeconomic ladder control more of the total wealth than ever before and, as a result, have access to high-quality healthcare, education, and employment opportunities. As the COVID-19 pandemic quickly spread around the world, those at the bottom of the socioeconomic ladder were disproportionately affected and continue to face a different reality than those at the top. The job opportunities for those at the bottom of the ladder are most likely minimum-wage jobs that pose a higher risk of contracting COVID-19, such as restaurant workers, grocery store clerks, and delivery drivers. 

While top-earners of the world moved into their home offices and seamlessly situated their children into a remote learning environment, those at the bottom faced unemployment and increased their risk of contracting the virus. In the United States, there is evidence that minority groups are being disproportionately affected by COVID-19 due to factors such as poverty and access to quality healthcare. The United States also has a large portion of the world’s reported COVID-19 cases and an increasing wealth gap. But does a significant relationship exist between these two outcomes? In other words, do countries with higher levels of income inequality have more COVID-19 cases? 

To analyze this question, I used the Theil Index as my measure of income inequality and collected the average number of the log of COVID-19 cases for each country in my data set as of October 6th, 2020. The Theil Index works as follows: the higher Theil Index score a country has, the higher income inequality levels. 

Using the median Theil Index for the data set I used, which is 0.04, I divided my observations into two groups: Group A and Group B. Countries in Group A have an average Theil Index that is greater than or equal to 0.04 and includes countries such as The Bahamas, Brazil, Honduras, Kuwait, Puerto Rico, Qatar, Russia, Sudan, and Turkey. Meanwhile, Group B countries have a Theil Index that is less than 0.04 and include Denmark, Japan, Nicaragua, Nigeria, The United Kingdom, and the United States. Each group has a relatively equal number of countries. And because countries included in Group A have higher Theil Index scores, they have higher levels of income inequality than Group B. 

Using this knowledge, I performed a two-sample difference of means t-test between both groups of countries to determine whether there was a significant difference in the average number of COVID-19 cases between Group A and Group B. My results yielded a p-value of 0.0355, which is less than the accepted political science p-value of 0.05, confirming that there was indeed a statistically significant difference in the average number of COVID-19 cases between both groups of countries. These results signify a correlation between countries with higher income inequality levels and those with larger numbers of COVID-19 cases. Additionally, these results demonstrate the need for the world to consider the living conditions and accessibility of healthcare systems within a country when assessing how severely it has been affected by the global pandemic.

Countries have taken unique approaches to COVID-19. Some governments like China have imposed strict lockdowns, while other countries like Sweden opted to take a less rigorous approach by imposing little to no lockdowns. While the stringency of government lockdowns and COVID-19 restrictions certainly play a role in how many cases a country has, these findings prove that other forces of living conditions and healthcare systems within a country are also important to consider. Future studies within this realm could explore how countries are attempting to mitigate these discrepancies within access to healthcare and living conditions and the effect these improvements have on the amount of COVID-19 cases within their country.

WORKS CITED

“Health Equity Considerations and Racial and Ethnic Minority Groups.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, July 2020, www.cdc.gov/coronavirus/2019-ncov/community/health-equity/race-ethnicity.html. 

Lyndon B. Johnson School of Public Affairs. Theil Index (Data file and codebook). Austin, TX: University of Texas Inequality Project, 2015. Web 18 October 2020. https://utip.lbj.utexas.edu/datasets.html

Max Roser, Hannah Ritchie, Esteban Ortiz-Ospina and Joe Hasell. Coronavirus Pandemic (Data file and codebook). Oxford, England: Global Change Data Lab, 2020. Web 6 October 2020. https://ourworldindata.org/coronavirus

OECD. In It Together: Why Less Inequality Benefits All. OECD Publishing, 2015. Web 20 October 2020.