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A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest

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  • Tahsin Saadi Sedik
  • Rui Xu

Abstract

In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality. We also find that higher social unrest, in turn, is associated with lower ourput and higher inequality, pointing to a vicious cycle. Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.

Suggested Citation

  • Tahsin Saadi Sedik & Rui Xu, 2020. "A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest," IMF Working Papers 2020/216, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/216
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    10. repec:aei:rpaper:1008560098 is not listed on IDEAS
    11. Oscar Jorda & Sanjay R. Singh & Alan M. Taylor, 2022. "Longer-Run Economic Consequences of Pandemics," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 166-175, March.
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    Cited by:

    1. Hadzi-Vaskov Metodij & Pienknagura Samuel & Ricci Luca Antonio, 2023. "The Macroeconomic Impact of Social Unrest," The B.E. Journal of Macroeconomics, De Gruyter, vol. 23(2), pages 917-958, June.
    2. Brzezinski, Michal, 2021. "The impact of past pandemics on economic and gender inequalities," Economics & Human Biology, Elsevier, vol. 43(C).
    3. Diakonova, Marina & Molina, Luis & Mueller, Hannes & Pérez, Javier J. & Rauh, Christopher, 2024. "The information content of conflict, social unrest and policy uncertainty measures for macroeconomic forecasting," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(4).
    4. Mario Lackner & Uwe Sunde & Rudolf Winter-Ebmer, 2023. "The Forces Behind Social Unrest: Evidence from the Covid-19 Pandemic," Economics working papers 2023-07, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Philip Barrett & Mariia Bondar & Sophia Chen & Mali Chivakul & Deniz Igan, 2024. "Pricing protest: the response of financial markets to social unrest," Review of Finance, European Finance Association, vol. 28(4), pages 1419-1450.
    6. Iacoella, Francesco & Justino, Patrica & Martorano, Bruno, 2021. "Do pandemics lead to rebellion? Policy responses to COVID-19, inequality, and protests in the USA," MERIT Working Papers 2021-014, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Lackner, Mario & Sunde, Uwe & Winter-Ebmer, Rudolf, 2021. "COVID-19 and the Forces behind Social Unrest," IZA Discussion Papers 14884, Institute of Labor Economics (IZA).
    8. Michal Brzezinski, 2021. "The impact of past pandemics on CO$_2$ emissions and transition to renewable energy," Papers 2104.14199, arXiv.org.
    9. Sun, Ya-Yen & Gossling, Stefan & Zhou, Wanru, 2022. "Does tourism increase or decrease carbon emissions? A systematic review," Annals of Tourism Research, Elsevier, vol. 97(C).
    10. Takeshi Kato, 2022. "Wealth Redistribution and Mutual Aid: Comparison using Equivalent/Nonequivalent Exchange Models of Econophysics," Papers 2301.00091, arXiv.org.
    11. Azio Barani, 2021. "Innovazione tecnologica e lavoro: automazione, occupazione e impatti socio-economici," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 0(114), pages 51-79.
    12. Comisión Nacional de los Mercados y la Competencia (CNMC), 2023. "Guide. Competition against inflation: How competition and efficient regulation help protect the purchasing power of consumers," Colección Estudios de Mercado G-2022-02_ENG, Comisión Nacional de los Mercados y la Competencia (CNMC).
    13. Gizelis, Theodora-Ismene & Karim, Sabrina M., 2024. "How epidemics affect marginalized communities in war-torn countries: Ebola, securitization, and public opinion about the security forces in Liberia," World Development, Elsevier, vol. 179(C).
    14. Barrett, Philip & Appendino, Maximiliano & Nguyen, Kate & de Leon Miranda, Jorge, 2022. "Measuring social unrest using media reports," Journal of Development Economics, Elsevier, vol. 158(C).
    15. Heekyun Oh, 2024. "The Moderating Role of ESG Administration on the Relationship between Tourism Activities and Carbon Emissions: A Case Study of Basic Local Governments in South Korea," Sustainability, MDPI, vol. 16(12), pages 1-26, June.
    16. Luis Rene Caceres, 2023. "Macroeconomics and Suicide in Mexico and Central America," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(5), pages 100-100, May.

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