Covid -19 and inequality
and reduces the probability of future employment, 11 the fact that a far greater proportion of lower- income workers will lose their jobs due to COVID-19 hence means that the gap in purchasing power between top and low earners will further widen. In the light of the fact that low-income house-holds income was no higher in 2018-19 than 2001-02, 12 this increase in inequality could be disastrous.
Figure 1. Proportion of in-work working-age adults working in retail, hospitality or leisure, by household income quintile, after housing costs, 2018-19. 13
The spike in unemployment of lower-income workers will also exacerbate regional inequalities. 14 This is because areas of the country which have a higher proportion of lower-income workers will face greater rises in unemployment due to the lock-down (figure 2). As regional income disparities reflect disparities in regional educational achievement, 15 and the higher one’s educational achievement the higher the probability of being able to work from home, 16 we can expect local unemployment increases to be inversely proportional to local educational achievement, furthering existing inequalities.
11 Mayhew Ken, and Paul Anand ‘Covid -19 and the UK labour market .’ Oxford Review of Economic Policy , graa017, June 2020: 6. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7313832/.
12 Mike Brewer et al . ‘The Living Standards Audit 2020.’ Resolution Foundation July 2020: 15. https://www.resolutionfoundation.org/publications/the-living-standards-audit-2020/. 13 Mike Brewer et al . ‘The Living Standards Audit 2020.’ Resolution Foundation July 2020:55. https://www.resolutionfoundation.org/publications/the-living-standards-audit-2020/
14 Murillo Campello, Gaurav Kankanhalli, and Pradeep Muthu krishnan. ‘ Corporate Hiring under COVID-19: Labor Market Concentration, Downskilling, and Income Inequality ,’ National Bureau of Economic Research , NBERWorking Papers 27208, (May 2020): 5. https://www.nber.org/papers/w27208 15 Blundell Richard, Monica Costa Dias, Robert Joyce, and Xiaowie Xu. ‘C ovid- 19 and inequalities’, The Institute For Fiscal Studies June 2020: 4. https://www.ifs.org.uk/inequality/covid-19-and-inequalities/ 16 Leslie Jack, Pacitti Cara, and James Smith. ‘Act now, or pay later: The OBR’s Fiscal Sustainability Report makes clear
the implications of a crisis-driven rise in unemployment for the public fi nances.’ July 2020:1-9. https://www.resolutionfoundation.org/app/uploads/2020/07/OBR-FSR-Spotlight.pdf.
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