Questions and answers about coronavirus and the UK economy
Questions and answers about coronavirus and the UK economy

How do large-scale pandemics affect inequality?

Research on past pandemics suggests that they can have significant effects on inequality and poverty. But while the Black Death triggered a systematic decline in wealth inequality in medieval Europe, the Spanish flu of 1918-19 led to rises in both poverty and income inequality.

Many fear that Covid-19 might lead to increases in poverty and economic inequality. At the same time, some draw on the historical experience of the Black Death in the fourteenth century to argue that major pandemics can instead lead to less unequal societies. But subsequent plagues and other epidemics have failed to produce these effects – and when they did manage to reduce the extent of poverty, it was usually due more to mass mortality among the poorest and most fragile than to redistribution. 

In the case of the most recent of the worst pandemics in history – the influenza pandemic of 1918-19 commonly known as the Spanish flu, which is also the one closest to Covid-19 from an epidemiological point of view – there is evidence that it fostered an increase in both inequality and poverty. This is the scenario that we must be prepared to face today.

Do we have evidence that a major pandemic can reduce inequality?

The Black Death of 1347-52 was the worst pandemic in European history in terms of overall mortality rates: it killed about half the population of the continent and of the broader Mediterranean area. We now have quite solid evidence that it led to a reduction in both income and wealth inequality (Alfani, 2020). This is particularly clear when considering wealth, for which we have relatively abundant data.

As Figure 1 shows, the Black Death triggered one of only two phases of systematic decline in European wealth inequality to be found during the last seven centuries. The second phase occurred in the twentieth century and is associated with the two world wars (see Piketty, 2014).

A brief account of these long-term tendencies in inequality is provided by this short video produced by the EINITE project (‘Economic inequality in pre-industrial Europe’). Based on this kind of evidence, it has been argued that throughout human history, only catastrophes have managed to lead to a substantial reduction in inequality (Scheidel, 2017), although this remains debated.

Based on Figure 1, in the aftermath of the Black Death, the richest 10% of the population lost their grip on between 15% and 20% of overall wealth. There were two main causes for this.

First, in the years following the pandemic, labour became scarce and real wages increased (which is indicative of a reduction in income inequality). More generally, the poorest strata of society enjoyed a boost to their bargaining power: they were able to negotiate better conditions and managed to acquire some property, often for the first time.

Second, extremely high mortality in the context of the partible inheritance system, which characterised many areas of Medieval Europe, led to the fragmentation of large patrimonies as estates were shared with all children rather than going just to the oldest one. This led many people to inherit properties that they did not need or want and, consequently, to an unusual abundance of property being offered on the market, which favoured a further reduction in wealth inequality. 

Figure 1: The share of wealth of the richest 10% in Europe, 1300-2010

Source: Alfani, 2017

But did all major pandemics reduce inequality?

The conditions prevailing at the time of the Black Death, which led to a decline in inequality, were not to be repeated in later plagues, even major ones like those that affected southern European countries during the seventeenth century and led to mortality rates comparable to the Black Death. For example, the 1630 plague, which killed about 35% of the population of northern Italy, produced an extremely limited and short-lived reduction in inequality, almost undetectable based on the available historical documentation.

This is because of the very different institutional framework in place at the onset of the pandemic. After the Black Death, when it had become clear that plague was to remain a recurrent scourge, the richest families began to protect their patrimonies from unwanted fragmentation by using specific institutions, like the fideicommissum which guaranteed that a well-defined set of family properties were transferred unaltered and undivided from one generation to the next. This interrupted one of the key mechanisms through which plague might have reduced wealth inequality. 

But there is more: after the seventeenth century plagues, we see no trace of an increase in real wages, either in Italy or in other severely affected European areas (compare Panel A and B in Figure 2). Consequently, we have no reason to think that the poorest strata of society experienced a significant improvement in their relative income or wealth (Alfani, 2020).

The bottom line here is that we need to be very cautious when generalising from historical evidence related to specific episodes, including important and much-researched ones like the Black Death. Things become even more complicated if we look deeper into how major pandemics can reduce the extent of poverty, and if we look at pathogens with different epidemiological characteristics.

Figure 2: Real wages of unskilled workers in European cities, 1300-1400 and 1600-1700 compared (in grams of silver)

Figure showing real wages of unskilled workers Europe
Source: Alfani, 2020b

What about the poor?

Although major pre-industrial epidemics did not always reduce overall inequality in a significant way, they usually had a visible impact on poverty. After the Black Death, poverty was reduced mostly because of redistribution towards the poor, a process fuelled by labourers’ stronger bargaining position and other factors. This can be seen in Figure 3 for England: the percentage of households with income insufficient to acquire a ‘respectability basket’ of goods declined from 41% in 1290 to 22% in 1381.

But in subsequent episodes, and especially when overall income and wealth inequality did not decline significantly, there is evidence that a much darker mechanism was at play to reduce poverty: the simple and brutal extermination of the poor. In the case of plague, it is well-known that from the late fifteenth century, it started to be considered a disease typical of the poor (Cohn, 2009), who consequently were expelled from cities or interned in specific institutions at the first suspicion of infection, a policy that seems to have further increased the death toll among the most economically and socially vulnerable strata.

Something similar happened during the cholera pandemics of the nineteenth century. Because the spread of cholera is accelerated by unhealthy and crowded living conditions, the disease affected the poorest groups much worse than all other strata, especially in cities. Thus, it tended to curtail the lower part of the distribution, which would have led to a reduction in inequality among the survivors even in the absence of any other distributive effect. In other words, inequality declined because the poorest died, not because wealth or income came to be more evenly distributed (Alfani, 2020).

Figure 3. Prevalence of poverty in England, 1290-1801/03 (percentage of households with income insufficient for having access to a ‘respectability basket’)

Source: Alfani, 2020c based on data from Broadberry et al, 2015

Did the Spanish flu increase inequality?

Together, the cases of cholera and plague allow us to highlight an important point: apart from the initial conditions, overall mortality rates and the structure of mortality also play a crucial role in determining the redistributive effects of an epidemic. This implies that the epidemiological characteristics of an infection shape its impact on inequality and poverty.

The Spanish flu of 1918-19 is usually taken as the worst-case scenario for a pandemic that is caused by a highly diffusible pathogen, which can infect a very large proportion of the overall population, but which does not have such a high case fatality rate – which is the case for Covid-19 too. Although the Spanish flu killed between 2.5% and 5% of the world population (50 to 100 million victims), the case fatality rate was quite low.

The horrific number of victims of the Spanish flu resulted from its ability to spread very efficiently. According to one estimate, it might have infected one-third of the world’s population. This proved crucial in determining its distributive impact: compared with major plagues, the Spanish flu did not cause a large contraction of the labour force. In other words, mortality was not high enough to lead to an improvement in the relative position of labourers – nor was it large enough to reduce inequality through extermination of the poor.

Instead, the pandemic tended to damage the incomes of the poorest and most fragile strata of society comparatively more. This is because in a pandemic that infects a very large proportion of the population (but does not usually kill them), those who need healthy conditions for physical work will also lose a larger part of their overall income.

Recent research suggests that the 1918-19 pandemic led to increases in income inequality (for example, in Italy – see Galletta and Giommoni, 2020) for the reasons mentioned above as well as the spread of unemployment caused by the economic crisis brought about by the disease. The most striking evidence is for Sweden, where for every death caused by influenza, there were four new poor people who had to ask for public help at poorhouses (Karlsson et al, 2014). 

What are the lessons from history?

The historical evidence suggests that the effects that a pandemic can have on inequality and poverty depend on the conditions in place at the beginning of the crisis, including the institutional framework, as well as the epidemiological characteristics of the pathogen involved. As a consequence, we must be very careful to avoid undue generalisations from past episodes.

That being said, the case closest to Covid-19 – both chronologically and even more clearly from an epidemiological point of view – is that of the Spanish flu of 1918-19. The early twentieth century pandemic led to increases in both poverty and income inequality – and it seems probable that Covid-19 will tend to produce the same effects.

During the current crisis, much concern has already been expressed about rapidly growing unemployment, especially among the poorest – not only due to the pandemic itself (think about job losses for infected people or those who will long suffer poor health as a consequence of the infection), but also as a result of the containment policies (such as lockdowns of various kinds) that have been applied worldwide (OECD, 2020). Governments need to be prepared to manage, and possibly to prevent, the social crisis that seems sure to follow the current health crisis.

Where can I find out more?

Who are experts on this question?

  • Guido Alfani at Bocconi researches epidemics in general, inequality and social mobility. 
  • Samuel Cohn at Glasgow has published extensively on state (and popular) reactions to epidemics from medieval to modern times.
  • Walter Scheidel at Stanford has explored the effects on inequality of major catastrophes.
Author: Guido Alfani
Photo: Edward Rogers, MediaNews Group, Oakland
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