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Unequal impact

Ryan Avent: economics correspondent, The Economist, WASHINGTON, DC

Covid-19 will leave a legacy of increased inequality

2021 in brief

Tax collectors in Europe start knocking on the doors of big tech firms. Digital-services
tax payments are falling due in Britain and France, and a levy is also being introduced in
Spain

WITH ANY luck, covid-19 will prove less of a disruption in 2021 than it did in 2020. But
even if a vaccine allows societies to inch back towards some kind of normality, the long-
run economic costs of the pandemic will mount. As the data flow in, they will reveal a
dramatic rise in inequality which may persist for decades.

Inequality, though far from a solved problem, came to look a bit more manageable in the
years before the pandemic. A slow but steady strengthening of labour markets in the
wake of the global financial crisis eventually yielded healthy wage gains for workers
across the income distribution, and measures of inequality in many economies levelled
off or even declined a little as the 2010s neared their end. At first, covid-19 did not
disrupt this trend much, thanks to generous aid packages provided by governments
around the world. In America, for instance, stimulus measures worth about 13% of GDP