A new study from the Institute for Fiscal Studies looks at the pandemic’s mixed impact on inequality.
Covid has widened inequalities in some areas, such as mental health and education, and job losses have hit lower income workers more. However, furlough and benefits increases have lessened income inequality, according to a study by the Institute for Fiscal Studies.
The study shows that the impact of the pandemic is complex “pointing in different directions and resisting easy simplifications”.
On the one hand, the report says the pandemic has pushed inequalities up in several areas. For instance, those who already had poor mental health, for instance, young people and women, were more affected at least in the early phase. School closures affected children from poorer backgrounds harder. Access to technology caused different experiences of remote learning and these effects seem to have fed through to differences in attainment, says the report. Lower-earning and less educated workers were more likely to be in shutdown sectors and unable to work from home – and were therefore more likely to lose their job or be furloughed.
On the other hand, the report says that labour market inequality did not result in higher inequalities in income, although it may have longer-term implications. This was due to the furlough and other schemes and temporary benefit uplifts.
The report says middle income households seems to have seen the biggest financial benefits during the pandemic, in part due to housing issues.
It looks forward at potential longer-term impacts, but is clear these are speculative. For instance, it says periods of unemployment or, perhaps, furlough, could result in longer term earnings impacts for those affected. When it comes to working from home, it says any increase could lead to earnings decreases as people seem willing to take a pay cut to get it, although it could also reduce one aspect of the gender pay gap – the gender commuting gap whereby women typically work in more local, less well paid jobs while men commute longer distances, especially after having children. Greater working from home might mean more access to better paid jobs, the report speculates.
It also looks at the possible impact on city centre jobs and housing as well as attitudes to benefits and says Government policy on taxation and public spending will also have a significant effect.