Pandemics and Inequality

Economic Historian Guido Alfani, who studies long run trends in inequality, posted a series of tweets on pandemics and inequality this week.

To sum up:

  1. Some pandemics in history helped reduce inequality, but it would be wrong to say that all pandemics reduce inequality.
  2. 2. Some pandemics may not have macro impact but can still have “major local distributive effects”.
  3. 3. If inequality reduced, it did because also because the pandemics killed more poor.
  4. Modern pandemics increased income inequality.

Now, the tweets:

To cite from the paper shared above:

The history of plague shows that severe pandemics can deeply affect economies, and that their consequences can be persistent and be felt for centuries. However, as these consequences depend to a large degree upon mortality rates (the percentage of the overall population dying), we must be careful when drawing comparisons with Covid-19.
Despite its devastating immediate effects in fact the fourteenth-century Black Death had mostly positive consequences in the long run, for example by reducing inequality – but this did not happen on the occasion of later plagues, and there is no reason to believe that Covid-19 might reduce inequality (quite the opposite).
A lesson from history which does, however, apply to Covid-19 is that the final economic (and social) consequences of pandemics depend upon the initial conditions and are very difficult and maybe impossible to foretell.
As the consequences of pandemics are potentially deep and persistent and cannot be confidently foretold, collective solutions to the crisis and policies which aim at solidarity, both within countries – for example between regions – and internationally, constitute the rational choice for risk-averse governments, and are highly advisable  

Alfani’s blog post here further argues:

The Black Death might have  positively influenced the development of Europe, even playing a role in the Great Divergence. Conversely,  it is arguable that seventeenth-century plagues in  Southern Europe (especially Italy), precipitated the Little Divergence. Clearly, epidemics can have asymmetric economic effects. The Black Death, for example, had negative long-term consequences for relatively under-populated areas of Europe, such as Spain or Ireland. More generally, the effects of an epidemic depend upon the context in which it happens.

He goes on to discuss how institutions shaped the spread and the consequences of plagues:

From the late fourteenth century permanent health boards were established, able to take quicker action than the ad-hoc commissions created during the emergency of 1348. These boards monitored constantly the international situation, and provided the early warning necessary for implementing measures to contain epidemics. From the late fourteenth century, quarantine procedures for suspected cases were developed, and in 1423 Venice built the first permanent lazzaretto (isolation hospital) on a lagoon island. By the early sixteenth century, at least in Italy, central and local government had implemented a broad range of anti-plague policies, including  health controls at river and sea harbours, mountain passes, and political boundaries. Within each Italian state, infected communities or territories were isolated, and human contact was limited by quarantines.

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