The Unequal Effect of the COVID-19 Pandemic on the Labour Market and Income Inequality in China: A Multisectoral CGE Model Analysis Coupled with a Micro-Simulation Approach.

Qi Zhang,Yunpeng Fan,Yexin Zhou,Xinxin Zhang,Weining Cao,Qi Cui,Xiaofan Li,Ling He

doi:10.3390/ijerph19031320

Abstract

The COVID-19 pandemic had an unequal impact on the employment and earnings of different labourers, consequently affecting households’ per capita income and income inequality. Combining a multisector computable general equilibrium model of China with a micro-simulation approach, this study aims to analyse the unequal effect of the COVID-19 pandemic on China’s labour market and income inequality. The results confirm the unequal impact of the pandemic on the employment and earnings of different labourer types. Labourers who are female, live in urban areas, and have relatively low education levels would suffer greater losses in employment and earnings. The pandemic would reduce household per capita income by 8.75% for rural residents and 6.13% for urban residents. While the pandemic would have a larger negative impact on the employment and earnings of urban labourers, it would have a greater negative impact on the household per capita income of rural residents. Moreover, the per capita income of low-income households is more vulnerable to the pandemic, and the number of residents living below the poverty line would increase significantly. Thus, the pandemic would aggravate income inequality in China and threaten the livelihoods of poor families. This study could inform researchers exploring the distributional effect of the COVID-19 pandemic in developing countries.

Highlights

As one of the most significant global public health crises in recent decades, the COVID19 pandemic posed severe threats to residential health and economy
Combining a multisector computable general equilibrium (CGE) model with a microsimulation approach, this study aims to assess the unequal impact of the COVID-19 pandemic on China’s labour market and income inequality
Gini coefficient the Lorenz curve moving down and to the right (Figure 7), which suggests that the COVID-19 pandemic aggravates income inequality in China

Summary

Introduction

As one of the most significant global public health crises in recent decades, the COVID19 pandemic posed severe threats to residential health and economy. Strict social distancing and massive shutdown of economic activities during the pandemic reduced enterprises’. Production and decreased consumer expenditure, inflicting a severe shock to China’s economy [1,2,3]. In 2020, China’s GDP grew by only 2.3% [4], much lower than the projected growth rate, assuming no pandemic (6.0% [5]). The pandemic triggered considerable shocks to China’s labour market. Numerous labourers lost their jobs, and the unemployment rate in urban areas reached 4.2% in 2020, 0.6 percentage points higher than that in. The annual salary in non-private enterprises grew by 5.2% in 2020, the lowest since 1984, while in private enterprises, it grew by 5.3%, the second lowest since 2009

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