Wage inequality during the pandemic: largely contained by public subsidies
1During the first months of the pandemic, the impact of covid-19 on inequality, before public subsidies are accounted for, was enormous. In April 2020, unemployment inequality as measured by the Gini index had increased by over 11 points. However, after considering public subsidies – particularly, the ERTE furlough scheme – this increase was reduced to 4 points.
2The results show that in order to reduce inequality, having a good system of public subsidies is not sufficient: the efficiency with which they are managed is also key. For example, if in November 2020 the processing of unemployment subsidies had been 5% faster in terms of in number of days, the Gini index would have been reduced by 0.2 points.
3The impact of covid-19 on inequality was greater among women, young people, and people born abroad.
4In Spain, employment is the most important component in the changes in inequality and, once more, it was the main factor during the covid-19 crisis. For illustrative purposes, between February and April 2020, nearly 90% of the increase in salary inequality (before public transfers) obeyed the decline in employment; the rest was due to increases in wage inequality among workers.