How has COVID impacted inequality?
Updated: Dec 30, 2022
In the following essay, I will examine three types of inequalities and assess how the events of the pandemic have affected them and whom they have impacted. I will also explore how the pandemic's outcome may affect these inequalities in the future.
Wealth inequality is one concept that is often cited when discussing inequality. Determined by the accumulation of valuable assets and resources that are measurable monetarily, wealth is most commonly denoted using net worth. The pandemic has widened the gap in average net worth between different demographics. The discussion will explore the factors leading to this, ranging from over-inflated asset markets to an unprecedented rise in housing prices. A household's wealth, shown by net worth, can influence their standard of living and, in turn, economic welfare, and so I will use wealth to highlight current economic inequality.
Another form of inequality explored is the difference in education both nationally and globally, which highlights the gap in reading and numerical skills between children in terms of months and years. This rift can affect them further into their careers by falling behind even further, preventing them from accessing higher education and, as a result, limiting their earning potential in their working lives. This can create wealth inequality in years to come, outlining future economic inequality.
The third and final inequality analysed in this essay is inequality in healthcare – the pandemic has highlighted the lack of necessary equipment and capacity in hospitals in deprived areas. More significantly, it introduced a new form of health disparity – vaccine inequality. As vaccines began rolling out, the countries at the very front of the queue were unsurprisingly the most developed, pushing lesser developed countries to the back of the line and years behind on the waiting list. My analysis will observe the roots of health inequality and consider its adverse impacts.
Firstly, wealth is defined as 'an accumulation of valuable economic resources that can be measured in terms of either real goods or money value's. As mentioned previously, the metric for wealth I will use is net worth, which comes from the value of all assets owned by an individual with any debts subtracted. During the pandemic, household net worth grew 8.4% in the UK, although the primary reason was not rising incomes but instead spending falling. As people were not allowed to go outside, households spent less on services such as eating out, and the household savings ratio saw an increase from 8.9% in January-March 2020 to 25.9% in April-July 2020 – the highest rise since the use of the metric began in 1987. This prompted many to start investing these excess savings into the housing and financial markets, as the central bank's low-interest rates meant saving would be pointless. In addition, the importance of garden space was highlighted during the lockdowns, as people began suffering in their confined apartments, and the combination of these factors inflated house prices, making homeowners much better off. This is made clear from the most significant contribution to household net worth: a 7.3% increase in average house prices. However, this creates a disparity in wealth between under-35s, over-represented in rental housing, and those over 65, who account for almost two-thirds of homeowners. Resultantly, younger families missed out on this gain in household net worth and were left behind, creating inequality in wealth by age.
Wealth inequality at the extremes also worsened. Despite a stock market collapse in the first few months of the pandemic, causing billionaires to experience massive reductions in their wealth, within nine months, the top one thousand billionaires had recovered all that they had lost. The root of this rebound is caused by the previously mentioned excess savings of middle-class households flowing into the financial markets. An over-inflated asset market meant that these billionaires regained the value of all their holdings. Asset price increases, or revaluations, were the dominant source of wealth accumulation – accounting for nearly 80% - and the top 10 richest collectively saw their wealth rise by $540 billion over this period. The pandemic led to an increase in wealth for many middle-class households, with the typical middle-class family seeing a wealth rise of £7800, and the wealthy elite, but those who started the pandemic with little or no financial assets saw none of the same benefits, widening the wealth gap between younger, poorer households and the rest.
Education is vital for any economy, as it provides a skilled labour force and leads to future economic growth through a positive feedback loop. Therefore, when a global pandemic strikes, causing millions of children to miss this crucial education, the consequences would be detrimental. The lockdown periods experienced throughout the pandemic meant that students in the first few weeks lost vital learning time before online learning systems were introduced, and even then, remote learning was nowhere near as effective, so the quality of education in lockdown was much worse. Inadvertently, education inequality between countries was expanded due to the difference in COVID-19 infection rates and therefore the duration of lockdowns, as children in nations with high numbers of cases would be forced to endure lower-quality education for longer and fall behind others in their age, and all students fell behind the level of previous years. For example, UK primary school students fell two to three months behind previous cohorts. However, education inequality in the UK did exist before the pandemic, as disadvantaged pupils in 2019 were five months behind their academic peers, although the pandemic still worsened this inequality. By 2020, this gap had increased to 7 months of lost learning for Pupil Premium students, with many of these students found in the North due to the North-South divide. The divide was exacerbated during the pandemic as poorer schools in northern cities could not afford to provide the same quality of online learning as wealthier schools in London, so children in the North were disproportionately impacted.
Global education inequality due to financial status was also worsened, with the pandemic depriving children in the poorest countries of four months of schooling, contrasted to just six weeks in high-income countries. This occurred as more impoverished families could not afford to buy the equipment necessary, such as laptops and stationery and therefore had less access to remote learning. As described beforehand, education affects future earning potential, as a lack of qualifications can bar access to high-paying jobs. A disparity in education now can lead to a disparity in wealth in the future. Estimates from the World Bank state that, due to all these factors and more, this generation of students risks losing $17 trillion in lifetime earnings, which emphasises how devastatingly massive the increase in education inequality has been due to the pandemic.