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How does exposure to COVID-19 influence health and income inequality aversion?

Asaria, Miqdad ORCID: 0000-0002-3538-4417, Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Cowell, Frank (2021) How does exposure to COVID-19 influence health and income inequality aversion? IZA discussion paper (14103). Institute for the Study of Labor (IZA), Bonn, Germany.

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Abstract

We study whether exposure to COVID-19 has affected individual aversion to health and income inequality in the UK, Italy, and Germany, as well as the effect of personal shocks on employment (redundancies, government replacement salary and unemployment), income and health directly linked to COVID-19. We find that conditioned on risk aversion and relevant covariates (income, education, demographics), individuals who have experienced either a health or an financial shock during the COVID-19 pandemic, exhibit lower inequality aversion in terms of health and income, compared to those who have not experienced these shocks. Comparing levels of health and income inequality aversion in the UK between the years 2016 and 2020 we find a significant increase in inequality aversion from 2016 to 2020 in both health (17.3%) and income domains (8.8%). However, our difference-in-differences (DiD) for treatment (risk) groups defined in terms of age, region and personal exposure to health and income shocks in 2020 compared to 2016, does not indicate any additional difference in inequality aversion. The exception being individuals who are both in a high-risk age group and at the same time also experienced a health shock in 2020 compared to 2016, which are significantly more inequality averse in both health and income domains.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.iza.org/publications/dp
Additional Information: © 2021 Deutsche Post STIFTUNG
Divisions: LSE Health
Economics
Health Policy
Subjects: R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I30 - General
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
Date Deposited: 17 Feb 2021 18:00
Last Modified: 17 Feb 2021 18:00
URI: http://eprints.lse.ac.uk/id/eprint/108857

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