Long run consequences of the COVID-19 pandemic on social inequality

Poverty - Inequality - Aid Effectiveness

This blog is part of Lustig, N. & Tommasi, M. (2020). El COVID-19 y la protección social de los grupos pobres y vulnerables, and was previously ppublished on the UNDP page on the June 9th, 2020. Para leer este  artículo en Español, click aquí.

The COVID-19 pandemic is seriously affecting social inequality, the long-run distribution of resources, and equality of opportunity on several dimensions. Here, we focus on one important channel of these long run effects, namely the intergenerational transmission of inequality. This article briefly summarizes the existing evidence about how parental resources influence the achievements of their children, in order to evaluate on which dimensions the pandemic magnifies existing inequalities. Primarily, the interplay of education, income, and health will eventually define the impact of COVID-19 on future generations. Presently and in the near future, suitable strategies will have to be enacted to control the outbreak and save lives, while preventing a social crisis in the long run by safeguarding the interests of vulnerable families.

As one of the many repercussions of the COVID-19 pandemic, the long-run distribution of resources and equality of opportunity are seriously challenged on several dimensions. One of the most severe consequences of the current situation, and of the mitigation strategies that governments have been forced to adopt to control the outbreak of the disease, is the intensification of economic and social inequality. Here, we focus on one important channel of these long run effects of COVID-19, namely the intergenerational transmission of inequality.

Due to the unprecedented nature of the situation, and the myriad of factors associated to it that we may not be yet aware of, predicting the effects based on past experiences is barely possible. However, it might be helpful to look at the existing evidence about how parental resources influence the achievements of their children, and to evaluate on which dimensions the pandemic magnifies existing inequalities.

First, the most obvious channel, namely the learning loss associated with school closures. On April 23, 2020, schools were closed nationwide in 189 countries; a situation affecting more than 1.5 billion learners worldwide. Several studies have shown that reduced instructional time lowers academic achievement. Recent estimates show that in the US the aggregate personal negative long run returns on future earnings could amount to 12.7 percent of GDP. As evidenced by studies measuring the educational gaps after summer vacations, it is likely that this situation mostly affects children from disadvantaged backgrounds. These children have fewer educational opportunities beyond school, while their parents are less prepared to support them in the educational process at home.

Furthermore, the capabilities of schools to facilitate learning from home are uneven and depend on the available educational tools and resources, public spending on education, as well as on the availability of computers and internet. Especially in rural areas digital inclusion is rather low and even teachers might not have the necessary internet coverage to distribute learning materials to their pupils. Meanwhile, most parents with higher education can help their children with learning from home. De facto they might be able to replace teachers and possibly even improve their children’s skills due to the one to one interaction.

Evidence for very young children shows that spending most of the time with their high skilled parents, rather than in childcare, significantly increases their cognitive abilities in the long run. Children living in less beneficial conditions have clear disadvantages: their parents might not be able to help them properly with the learning material, or might not be well informed about the importance of supporting them during this period.  Furthermore, these children usually have more siblings, among these possibly younger siblings, and less space at home with few or no possibilities to find a quiet place to learn. As a consequence, it is likely that the human capital loss will be disproportionate across the distribution, leading to stronger educational and income inequality in the future.

Another potential channel is parental job loss. The demand and supply shocks caused by the pandemic, and the quarantine measures enacted by governments, have forced many enterprises to shut down. While most high skilled workers are able to work from home and are not suffering any wage reduction, the same is not true for low skilled and manual workers that might have lost their jobs during this period. Current estimates lie hereby around 10.5 percent of overall working hour reduction due to the pandemic with around 436 million enterprises worldwide facing high risks of disruption. Even more vulnerable are workers in the informal sector, whose current incomes are basically set to zero when not able to work. Their earnings are estimated to decline by up to 81%.

Consequently, families at the bottom of the distribution are suffering a substantial reduction in their economic resources and are facing a very stressful situation characterized by strong uncertainty. These negative shocks will have a deep impact on future generations, especially in countries with high monetary costs of education, for instance because of tuition fees, and those with strong disparities in quality between public and private schools. In addition, job loss of the chief earner has been shown to induce other members of the household to increase their labor market participation; also known as the added worker effect. Older children in particular could therefore drop out of school to enter the labor market as soon as possible, leaving school without a valid qualification.

Health inequality is a further channel affecting the intergenerational transmission of human capital with possible long run repercussions due to the pandemic. Although under equal conditions infection with the virus does not depend on any particular individual characteristics, the mortality attached to it is strongly influenced by age and the presence of other pathologies.

Depending on the quality and universality of the national health care system, mortality might also be different by socioeconomic groups. Also the likelihood of infection depends on an individual’s ability to isolate and reduce social contact. This is possible when working from home, but not for many other jobs, and might be next to impossible in certain living situations, for instance in multigenerational families.

Furthermore, social isolation and school closures could have a dramatic impact on health inequality, especially among children. The nutrition of children from disadvantaged backgrounds, as well as their medical care, is often supported by schools and other educational institutions. Prolonged school closures and home confinement can have a detrimental impact on children’s health, for instance on obesity, due to reduced physical activity, irregular sleep patterns, and less favorable diets.

Many factors can hereby also contribute to the psychological impact of the pandemic, even causing post-traumatic stress: fear of infection, frustration, lack of social contact with friends and teachers, lack of personal space, and family financial loss. It is not inconceivable that socio-economic disparities will play a role on the seriousness of these impacts. In the short and long run, these unequal health effects will negatively affect the productivity of children from disadvantaged backgrounds and consequently contribute to increasing skill inequality. 

Past research shows that one important aspect for understanding the gravity of economic inequality, and its repercussions on equality of opportunity, is the intergenerational dimension of the phenomenon. The interplay of education, income, health and other factors will eventually define the strength of the effect of COVID-19 on future generations. Addressing the possible intergenerational effects of the pandemic with proper public policies and interventions will be crucial for mitigating the dramatic impact that the current situation could have on our societies in the long run.

Under normal circumstancescertain social policies, for instance the public provision of quality education and health, are effective at reducing the strength of association between the socioeconomic status of parents and that of their children. These measures will have to be adapted to the new situation caused by the pandemic. One possible decision that could be taken to alleviate at least the learning loss as soon as a school reopening will be save, could be to shorten school vacations to make up for the missed instructional time. Cost benefit analyses of school closures during flu epidemics estimate that this can be an efficient way to mitigate the outbreak while keeping the long run costs as low as possible. This could also alleviate parents from childcare burdens and give them additional time to make up for the possibly suffered income losses.

An additional, possibly effective strategy to close the educational gaps while strengthening social cohesion could be to implement collaborative learning among pupils in the classrooms. In any case, enacted post-pandemic measures and policies should be chosen judiciously and under consideration of scientific knowledge. Meanwhile, recent evidence suggests that interventions aimed at social distancing, like school closure and national quarantine policies, have successfully achieved their goals and avoided an even higher number of deaths. Suitable further strategies will need to be enacted to control the outbreak of COVID-19 and save lives, while safeguarding the interests of vulnerable families. This will be crucial for preventing a social crisis in the long run.

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