“If you look at the average Gini coefficient for advanced economies, it’s like 30, 32 or something like that,” Narita said. “For emerging and developing economies, it’s in the 40s.”

Prior to the pandemic, inequality in emerging markets and low-income developing countries was already bad compared to advanced economies. While many poor countries have made progress in reducing poverty and increasing life expectancies, they have still struggled with persistently high inequality in terms of education and employment, especially for women and young people. Ethiopia and Pakistan are example of countries that have followed this trajectory.

Why Covid increased inequality

Cugat and Narita observed that high-income workers in emerging market economies and low-income developing countries can often work from home and continue much of their business as usual. This resulted in fewer layoffs and furloughs but also a worsening income gap during the pandemic. By comparison, many more low-income, high-contact positions were lost due to lockdowns and the cancellation of activities that must be done in person, a dynamic that was also observed in advanced economies like the US.

An earlier IMF economic study estimated about 100 million workers—15% of the workforce in the research sample’s 35 advanced and emerging countries—would find it difficult to work remotely. This is especially true for younger workers, those with no college education, and those with lower wages. Cugat also says girls and women were hit particularly hard, citing the total closure of school systems across several of these countries disproportionately affecting women due to childcare responsibilities.

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