IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/16366.html
   My bibliography  Save this paper

Inequality in Life and Death

Author

Listed:
  • Eichenbaum, Martin
  • Rebelo, Sérgio
  • Trabandt, Mathias

Abstract

We argue that the Covid epidemic disproportionately affected the economic well-being and health of poor people. To disentangle the forces that generated this outcome, we construct a model that is consistent with the heterogeneous impact of the Covid recession on low- and high-income people. According to our model, two thirds of the inequality in Covid deaths reflect pre-existing inequality in comorbidity rates and access to quality health care. The remaining third, stems from the fact that low-income people work in occupations where the risk of infection is high. Our model also implies that the rise in income inequality generated by the Covid epidemic reflects the nature of the goods that low-income people produce. Finally, we assess the health-income trade-offs associated with fiscal transfers to the poor and mandatory containment policies.

Suggested Citation

  • Eichenbaum, Martin & Rebelo, Sérgio & Trabandt, Mathias, 2021. "Inequality in Life and Death," CEPR Discussion Papers 16366, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:16366
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=16366
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas J. Kniesner, 2019. "Behavioral economics and the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 58(2), pages 207-217, June.
    2. Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2005. "Large Devaluations and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 742-784, August.
    3. Sven Drefahl & Matthew Wallace & Eleonora Mussino & Siddartha Aradhya & Martin Kolk & Maria Brandén & Bo Malmberg & Gunnar Andersson, 2020. "A population-based cohort study of socio-demographic risk factors for COVID-19 deaths in Sweden," Nature Communications, Nature, vol. 11(1), pages 1-7, December.
    4. Dirk Kruger & Harald Uhlig & Taojun Xie, 2020. "Macroeconomic Dynamics and Reallocation in an Epidemic," Working Papers 2020-43, Becker Friedman Institute for Research In Economics.
    5. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
    6. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    7. Elizabeth J. Williamson & Alex J. Walker & Krishnan Bhaskaran & Seb Bacon & Chris Bates & Caroline E. Morton & Helen J. Curtis & Amir Mehrkar & David Evans & Peter Inglesby & Jonathan Cockburn & Helen, 2020. "Factors associated with COVID-19-related death using OpenSAFELY," Nature, Nature, vol. 584(7821), pages 430-436, August.
    8. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2018. "Monetary Policy According to HANK," American Economic Review, American Economic Association, vol. 108(3), pages 697-743, March.
    9. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 553-609.
    10. Gonzalez-Eiras, Martin & Niepelt, Dirk, 2020. "On the Optimal "Lockdown" During an Epidemic," CEPR Discussion Papers 14612, C.E.P.R. Discussion Papers.
    11. Joseph Benitez & Charles Courtemanche & Aaron Yelowitz, 2020. "Racial and Ethnic Disparities in COVID-19: Evidence from Six Large Cities," Journal of Economics, Race, and Policy, Springer, vol. 3(4), pages 243-261, December.
    12. Facundo Piguillem & Liyan Shi, 2022. "Optimal Covid-19 Quarantine and Testing Policies [‘Optimal targeted lockdowns in a multigroup sir model’]," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2534-2562.
    13. Mario J. Crucini & Oscar O'Flaherty, 2020. "Stay-at-Home Orders in a Fiscal Union," NBER Working Papers 28182, National Bureau of Economic Research, Inc.
    14. Christopher J. Erceg & Dale W. Henderson & Andrew T. Levin, 2019. "Optimal Monetary Policy with Staggered Wage and Price Contracts," Credit and Capital Markets, Credit and Capital Markets, vol. 52(4), pages 537-571.
    15. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Appendix to "Distributional National Accounts: Methods and Estimates for the United States"," World Inequality Lab Working Papers halshs-02794330, HAL.
    16. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2020. "The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the U.S," NBER Working Papers 27794, National Bureau of Economic Research, Inc.
    17. Nir Jaimovich & Sergio Rebelo & Arlene Wong & Miao Ben Zhang, 2020. "Trading Up and the Skill Premium," NBER Macroeconomics Annual, University of Chicago Press, vol. 34(1), pages 285-316.
    18. Hacıoğlu-Hoke, Sinem & Känzig, Diego R. & Surico, Paolo, 2021. "The distributional impact of the pandemic," European Economic Review, Elsevier, vol. 134(C).
    19. Luiz Brotherhood & Philipp Kircher & Cezar Santos & Michèle Tertilt, 2020. "An Economic Model of the Covid-19 Epidemic: The Importance of Testing and Age-Specific Policies," CESifo Working Paper Series 8316, CESifo.
    20. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    21. Glover, Andrew & Heathcote, Jonathan & Krueger, Dirk & Rios-Rull, Jose-Victor, 2020. "Health versus Wealth: On the Distributional Effects of Controlling a Pandemic," CEPR Discussion Papers 14606, C.E.P.R. Discussion Papers.
    22. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
    23. Krueger, Dirk & Uhlig, Harald & Xie, Taojun, 2020. "Macroeconomic Dynamics and Reallocation in an Epidemic: Evaluating the "Swedish Solution''," CEPR Discussion Papers 14607, C.E.P.R. Discussion Papers.
    24. Farboodi, Maryam & Jarosch, Gregor & Shimer, Robert, 2021. "Internal and external effects of social distancing in a pandemic," Journal of Economic Theory, Elsevier, vol. 196(C).
    25. Alvaredo, Facundo, 2011. "A note on the relationship between top income shares and the Gini coefficient," Economics Letters, Elsevier, vol. 110(3), pages 274-277, March.
    26. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
    27. Carvalho, V & Garcia, Juan R. & Hansen, S. & Ortiz, A. & Rodrigo, T. & More, J. V. R., 2020. "Tracking the COVID-19 Crisis with High-Resolution Transaction Data," Cambridge Working Papers in Economics 2030, Faculty of Economics, University of Cambridge.
    28. Daron Acemoglu & Victor Chernozhukov & Ivàn Werning & Michael D. Whinston, 2020. "A Multi-Risk SIR Model with Optimally Targeted Lockdown," CeMMAP working papers CWP14/20, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    29. McLaren John, 2021. "Racial Disparity in COVID-19 Deaths: Seeking Economic Roots with Census Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(3), pages 897-919, July.
    30. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 77-153.
    31. Natalie Bachas & Peter Ganong & Pascal J. Noel & Joseph S. Vavra & Arlene Wong & Diana Farrell & Fiona E. Greig, 2020. "Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data," NBER Working Papers 27617, National Bureau of Economic Research, Inc.
    32. Fernando Alvarez & David Argente & Francesco Lippi, 2021. "A Simple Planning Problem for COVID-19 Lock-down, Testing, and Tracing," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 367-382, September.
    33. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 77-153.
    34. Titan Alon & Matthias Doepke & Jane Olmstead-Rumsey & Michèle Tertilt, 2020. "The Impact of COVID-19 on Gender Equality," CRC TR 224 Discussion Paper Series crctr224_2020_163, University of Bonn and University of Mannheim, Germany.
    35. Toxvaerd, F.M.O, 2020. "Equilibrium Social Distancing," Cambridge Working Papers in Economics 2021, Faculty of Economics, University of Cambridge.
    36. Callum Jones & Thomas Philippon & Venky Venkateswaran, 2021. "Optimal Mitigation Policies in a Pandemic: Social Distancing and Working from Home [A simple planning problem for covid-19 lockdown]," Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5188-5223.
    37. Brotherhood, Luiz & Kircher, Philipp & Santos, Cezar & Tertilt, Michèle, 2020. "An economic model of the Covid-19 epidemic: The importance of testing and age-specific policies," CEPR Discussion Papers 14695, C.E.P.R. Discussion Papers.
    38. Faria-e-Castro, Miguel, 2021. "Fiscal policy during a pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 125(C).
    39. Eichenbaum, Martin & Godinho de Matos, Miguel & Lima, Francisco & Rebelo, Sérgio & Trabandt, Mathias, 2020. "How do People Respond to Small Probability Events with Large, Negative Consequences?," CEPR Discussion Papers 15373, C.E.P.R. Discussion Papers.
    40. Alberto Cavallo, 2020. "Inflation with Covid Consumption Baskets," NBER Working Papers 27352, National Bureau of Economic Research, Inc.
    41. Brotherhood, Luiz & Kircher, Philipp & Santos, Cezar & Tertilt, Michèle, 2020. "An economic model of the Covid-19 epidemic: The importance of testing and age-specific policies," CEPR Discussion Papers 14695, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eichenbaum, Martin S. & Rebelo, Sergio & Trabandt, Mathias, 2022. "The macroeconomics of testing and quarantining," Journal of Economic Dynamics and Control, Elsevier, vol. 138(C).
    2. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2022. "The political economy of early COVID-19 interventions in US states," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    3. Goldfayn-Frank, Olga & Lewis, Vivien & Wehrhöfer, Nils, 2022. "Spending effects of child-related fiscal transfers," Discussion Papers 26/2022, Deutsche Bundesbank.
    4. Hevia, Constantino & Macera, Manuel & Neumeyer, Pablo Andrés, 2022. "Covid-19 in unequal societies," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2020. "The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the U.S," NBER Working Papers 27794, National Bureau of Economic Research, Inc.
    2. Eichenbaum, Martin S. & Rebelo, Sergio & Trabandt, Mathias, 2022. "The macroeconomics of testing and quarantining," Journal of Economic Dynamics and Control, Elsevier, vol. 138(C).
    3. Boppart, Timo & Harmenberg, Karl & Hassler, John & Krusell, Per & Olsson, Jonna, 2020. "Integrated epi-econ assessment," CEPR Discussion Papers 15595, C.E.P.R. Discussion Papers.
    4. David E. Bloom & Michael Kuhn & Klaus Prettner, 2022. "Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses," Journal of Economic Literature, American Economic Association, vol. 60(1), pages 85-131, March.
    5. Acedański, Jan, 2021. "Optimal lockdown policy during the election period," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 102-117.
    6. Garriga, Carlos & Manuelli, Rody & Sanghi, Siddhartha, 2022. "Optimal management of an epidemic: Lockdown, vaccine and value of life," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    7. Bognanni, Mark & Hanley, Douglas & Kolliner, Daniel & Mitman, Kurt, 2020. "Economics and Epidemics: Evidence from an Estimated Spatial Econ-SIR Model," CEPR Discussion Papers 15310, C.E.P.R. Discussion Papers.
    8. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
    9. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    10. Marina Azzimonti-Renzo & Alessandra Fogli & Fabrizio Perri & Mark Ponder, 2020. "Pandemic Control in ECON-EPI Networks," Staff Report 609, Federal Reserve Bank of Minneapolis.
    11. Giorgio Fabbri & Salvatore Federico & Davide Fiaschi & Fausto Gozzi, 2021. "Mobility decisions, economic dynamics and epidemic," Papers 2107.01746, arXiv.org.
    12. Dizioli, Allan & Pinheiro, Roberto, 2021. "Information and inequality in the time of a pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 130(C).
    13. Farboodi, Maryam & Jarosch, Gregor & Shimer, Robert, 2021. "Internal and external effects of social distancing in a pandemic," Journal of Economic Theory, Elsevier, vol. 196(C).
    14. Raül Santaeulàlia-Llopis, 2021. "Economic Activity and Public Health Policy: A Note," Working Papers 1284, Barcelona School of Economics.
    15. Guimarães, Luís, 2021. "Antibody tests: They are more important than we thought," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    16. Daron Acemoglu & Ali Makhdoumi & Azarakhsh Malekian & Asuman Ozdaglar, 2020. "Testing, Voluntary Social Distancing and the Spread of an Infection," NBER Working Papers 27483, National Bureau of Economic Research, Inc.
    17. David Baqaee & Emmanuel Farhi, 2020. "Nonlinear Production Networks with an Application to the Covid-19 Crisis," NBER Working Papers 27281, National Bureau of Economic Research, Inc.
    18. Bisin, Alberto & Moro, Andrea, 2022. "Spatial‐SIR with network structure and behavior: Lockdown rules and the Lucas critique," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 370-388.
    19. Hausmann, Ricardo & Schetter, Ulrich, 2022. "Horrible trade-offs in a pandemic: Poverty, fiscal space, policy, and welfare," World Development, Elsevier, vol. 153(C).
    20. David Berger & Kyle Herkenhoff & Chengdai Huang & Simon Mongey, 2022. "Testing and Reopening in an SEIR Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 1-21, January.

    More about this item

    Keywords

    Epidemic; Inequality; Recession;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • H0 - Public Economics - - General
    • I1 - Health, Education, and Welfare - - Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:16366. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.cepr.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.