Impact of Covid-19 on Income Inequality; a Comparative Analysis for China and Italy

Abstract

This study examines the impact of covid 19 on income inequality and comparison between China and Italy. Trends in Gini coefficient showed differentiated results for two countries. In this comparison various indicators came to consideration that affected inequality. For empirical investigation from the past data collected from World Development Indicators and Generalized methods of moments (GMM) for panel data analysis. Results indicated that poverty and unemployment have significant positive impact on income inequality while rate of taxes shown negative and significant impact on income inequality. These results supported many other studies but the post covid trend in Gini coefficient shows contradictory results. Rising trend in income inequality in China and falling trend in Italy drives the attention in mitigation policies. China preferred to save its population from corona virus and implemented strict stay at home and isolation policy. In this regard inequality showed rising trend. Whereas Italian government along with isolation and stay at home policies financed poor much and paid less attention to rich. In this way the gap between rich and poor came down. This study pays attention to the country-based policies reflecting government preferences and initiatives taken for betterment.