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Essentially Unemployed: Potential Implications of the COVID-19 Crisis on Wage Inequality

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  • Ansel Schiavone

Abstract

The aim of this paper is to determine how wage inequality is likely to be affected by thecurrent COVID-19 pandemic. I first estimate the impact that social distancing will have onUS state-level employment using pre-crisis industry data. I then consider the joint impactof states’ unemployment benefit programs and the federal CARES Act on national inequalityusing representative sampling and Markov-Chain-Monte-Carlo estimations. I find that whilewage inequality is likely to improve in the short-run with the added federal subsidy, allowingthis support to expire prematurely will result in a worsening of pre-crisis wage inequality.

Suggested Citation

  • Ansel Schiavone, 2020. "Essentially Unemployed: Potential Implications of the COVID-19 Crisis on Wage Inequality," Working Paper Series, Department of Economics, University of Utah 2020_06, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2020_06
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    File URL: https://economics.utah.edu/research/publications/2020_06.pdf
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    References listed on IDEAS

    as
    1. Lance Taylor & Ozlem Omer & Armon Rezai, 2015. "Wealth Concentration, Income Distribution, and Alternatives for the USA," Working Papers Series 17, Institute for New Economic Thinking.
    2. Markus P. A. Schneider & Daniele Tavani, 2016. "A tale of two Ginis in the US, 1921–2012," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(6), pages 677-692, November.
    3. Bruce D. Meyer & James X. Sullivan, 2013. "Consumption and Income Inequality and the Great Recession," American Economic Review, American Economic Association, vol. 103(3), pages 178-183, May.
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    Cited by:

    1. Hummy Song & Ryan M. McKenna & Angela T. Chen & Guy David & Aaron Smith-McLallen, 2021. "The Impact of the Non-essential Business Closure Policy on Covid-19 Infection Rates," NBER Working Papers 28374, National Bureau of Economic Research, Inc.
    2. Hummy Song & Ryan McKenna & Angela T. Chen & Guy David & Aaron Smith-McLallen, 2021. "The impact of the non-essential business closure policy on Covid-19 infection rates," International Journal of Health Economics and Management, Springer, vol. 21(4), pages 387-426, December.

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    More about this item

    Keywords

    Wage inequality; unemployment; COVID-19; Markov-Chain-Monte-Carlo; Gibbs sam-pling; structuralist method JEL Classification:E24; E27; C15;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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