Multidimensional inequality and covid-19 in Brazil by Luiza Nassif-Pires, Laura Carvalho and Eduardo Rawet published by Levy Economics Institute of Bard College (2020).
“Since the 2008 global financial crisis, income andwealth inequalities have gained renewed attention in the economic literature and wider policy debates. Given the economic and political costs of the broadly acknowledged rise of income concentration at the top of the distribution since the 1980s, economists and politiciansin the past decade have put forward variousinterpretations as well as proposals for reducing the gap between the very rich and the rest of the population. However, none of these discussions seem to have prepared our society to battle the devastating consequences of inequality during the COVID-19 crisis. On the one hand, inequality aggravates the pandemic, as the wide gap between the rich and poor—in terms of income, type of employment, living conditions, access to health, and other dimensions—has major consequences for the distribution of the death toll within and between countries. On the other hand, the pandemic exacerbates inequality by widening this gap through its deep economic and social impacts.
Based on data from 175 countries after five significant epidemics—SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014), and Zika (2016)—a study by Furceri, Loungani, and Ostry (2020) suggests that these episodes have contributed to raising income inequality by almost 1.5 percent in the five subsequent years. This effect may be substantially larger in the COVID-19 pandemic, with health and economic burdens disproportionately laid on those at the bottom of the distribution. First, the most vulnerable are more prone to be infected by the virus, due both to the need to continue working in person and to inequalities in living conditions. Second, precarious healthcare and the unequal distribution of comorbidities play a role in explaining wide disparities in the severity of cases and the number of deaths. Third, the loss of income generated by the crisis seems to disproportionately affect self-employed and informal workers, aswell aslower-skilled employeesin the services, retail, and construction sectors.
Hence, after an initial period in which high-income countries were the epicenter of the COVID-19 pandemic, developing countries now account for more than half of global deaths. A study by Murray et al. (2006)suggeststhat mortality rates during the 1918–20 flu pandemic were up to 30 times higher in poor regions of the world. Simonsen et al.(2013)show that during the H1N1 pandemic in 2009, mortality was 20 times higherin South America than in European countries. In 2020, Latin American countries are attracting worldwide attention for their inability to fight the coronavirus. In August, the Latin American death toll passed 200,000, while Brazil topped 100,000 deaths, ranking second in the world in absolute number of deaths. If this were not enough, the IMF projects a fall of 9.3 percent in Latin America’s GDP in 2020—a number that makes the 4.9 percent contraction projected for global GDP look like a mild recession.
In addition to the ineffectiveness of lockdown measures, wide structural inequalities, high levels of informality in the labor market, and the importance of the services and tourism sectors in these economies may help explain these disastrous results. Moreover, the region was experiencing a period of slow growth and thus faced high levels of unemployment prior to the pandemic.In this context, many of these countrieslacked the fiscal space to react proportionately: as of May 2020, more than $1 trillion had already been obtained as loans from the IMF to fight the crisis in Latin America.
By the beginning of August, countries like Peru, Chile, and Brazil had the fiscal space to spend more than their neighbors but have nonetheless presented some of the highest numbers in the world with respect to deaths per 100,000 people.1 In contrast, Uruguay ranked 125th while spending less than 2 percent of GDP to fight the pandemic. While other differences certainly have played a role, Uruguay is known for its relatively low level of income inequality in the region: the 2018 Gini index for Brazil was 53.9 and only 39.7 in Uruguay (World Bank 2018).
High inequality may contribute to explaining why, since mid-June 2020, Brazil has had the second-highest number of cases in the world, even after spending more than 6 percent of GDP in fiscal measures to fight the COVID-19 crisis. Setting aside the antiscience discourse of the federal government and the overall disastrous approach on the health front, the next section will examine the country’s wide inequalities as a risk factor in the pandemic. The following section will build a preliminary analysis of the unequally distributed economic and health costs of the COVID-19 crisis in Brazil. The final section concludes the policy brief…”
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