During my Sunday seminar a student made a presentation with preliminary data on how Covid-19 has affected the wealth and the income of different households in China, ranked by income. I sort of expected a broadly linear relationship in which the rich and very rich would have...

...been unaffected or slightly worse off, the middle worse off, and the poor a lot worse off.

According to her data, however, the rich and very rich were actually better off in terms of both income and wealth (the latter, we think, mainly because they owned “better” real...

...estate), while the middle were worse off in both, and the poor were much worse off (in wealth mainly, we think, because of a depletion in savings).

I expected Covid-19 to worsen income inequality, but I was surprised both by the extent to which it did and by the fact that...

...the wealthy actually continued advancing while only the middle and the poor were worse off – at least according to preliminary data. What happened in China won’t necessarily happen elsewhere, but, still, I suspect we will see similar patterns in other countries affected by...

...Covid-19. The net economic effect of the pandemic, in other words, is likely to be a very substantial transfer of wealth up the income scale. It seems to me that any fiscal or monetary response that doesn’t take this into consideration is likely to be ineffective and maybe...

...even harmful (if it worsens income inequality).