Webinar Series on COVID-19 and Inequality, 16 June 2021, More information at: https://www.oecd.org/wise/events/covid-and-inequality-webinars.htm

1. COVID-19 and inequalities:
raising the alarm bell for
policy action
Discussion based on “Inequalities in the
Times of a Pandemic”, by Stefanie
Stantcheva
Orsetta Causa
Deputy head of division, Head of the inclusive growth unit, Structural Surveillance Division,
OECD Economics Department
Webinar Series on COVID-19 & Inequality, OECD
June 16 2021

2. THE MULTIPLE FACES OF
INEQUALITIES

3. Inequalities: a policy concern before the crisis
1. Lower business dynamism, rising concentration, market and
monopsony power >> increasing wage dispersion
2. Labour market polarization << technology displacing medium
/low-skilled jobs
3. Declining tax and transfer redistribution << tax competition
4. Growing spatial inequalities >>access to core public services;
digital; implications of the green transition
5. Persistent inequalities of opportunities – low social mobility
• Trust in governments declining in many countries and esp.
places “left-behind” – fueling a geography of discontent
• Policymakers have understood that inequalities should be
addressed not only on moral but also on growth and
political stability grounds

4. Productivity gaps have widened,
and so have wage gaps
Note: Frontier firms are the 5% of firms with the highest labour productivity by year and sector. Industries included are manufacturing and
business services, excluding the financial sector, for firms with at least 20 employees.
Source: Andrews, D., Criscuolo C., and Gal P. (2016), “The Best versus the Rest: The Global Productivity Slowdown, Divergence across Firms
and the Role of Public Policy”, OECD Productivity Working Papers, No. 05; Orbis data of Bureau van Dijk; and OECD calculations.
Real compensation per worker
Labour productivity
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
2001 2003 2005 2007 2009 2011 2013 2015 2017
Frontier firms - top
5%
Non-frontier firms
0
0.1
0.2
2001 2003 2005 2007 2009 2011 2013 2015
90th percentile of
workers
10th percentile of
workers

5. Income redistribution through taxes and
transfers has declined
Source: Redistribution defined by comparing household income inequality (Gini coefficients) before and after taxes and transfers:
Calculations based on the OECD Income Distribution database http://oe.cd/idd, see Causa, O. and M. Hermansen (2017),
"Income redistribution through taxes and transfers across OECD countries", OECD Economics Department Working Papers, No.
1453, OECD Publishing, Paris, https://doi.org/10.1787/bc7569c6-en
Change in redistribution for the working-age population,
mid-1990s to 2018 or latest available year
-20
-15
-10
-5
0
5
SWE
ISR
FIN
DNK
NZL
OECD16
CAN
AUS
NLD
DEU
CZE
GBR
FRA
USA
ITA
NOR
JPN
Percentage
points

6. Inequalities start early on with unequal
educational opportunities for children
Educational outcomes largely affected by family background
Mean PISA performance score in reading by quarter of
socio-economic status, 2018
350
400
450
500
550
600
MEX ITA FRA DEU USA AUS JPN GBR KOR CAN
Bottom quarter Top quarter
Note: The socio-economic profile is measured by the school's average PISA index of economic, social and cultural status (ESCS). For
this analysis, the sample is restricted to schools with the modal ISCED level for 15-year-old students.
Source: OECD, PISA 2018 Database.

7. …cumulating over the lifecycle with unequal
access to training for adults
Participation in education, by numeracy proficiency level and labour
market status, OECD average
Source: OECD. Survey of Adult Skills (PIAAC). PIAAC refers to the OECD Programme for the
International Assessment of Adult Competencies. See Annex 3 for notes (www.oecd.org/edu/eag.htm).
2012 data
0
10
20
30
40
50
60
70
80
Employed Unemployed Inactive
Percent
Level 1 or below Level 2 Level 3 Level 4 or 5

8. Inequality is also spatial: unequal access to key
amenities can fuel a geography of discontent
Source: OECD Regions at a Glance, 2020 edition
Access to core health services
Beds per 1 000 people, metro typology
Access to fast digital services
Percentage of households with access to Internet >30Mbit/s
0 20 40 60 80 100
NLD
ISL
BEL
CHE
LUX
IRL
LVA
USA
CAN
DNK
PRT
DEU
HUN
SVK
CZE
EST
SVN
AUT
NOR
ESP
FRA
ITA
SWE
POL
LTU
Rural Total
%
5 7 9 11
Large metropolitan
regions
Metropolitan
regions
Regions near a
metropolitan area
Regions with/near
a small-medium
city
Remote regions
OECD
2018 2000
Hospital beds per 1 000 people
TL3

9. Inequalities have been a policy concern
during the crisis
Countries took unparalleled measures to support
workers, firms and households:
• Financial support to firms
• To people losing jobs/ income
• Job-retention schemes
• Extensions to paid sick leave
• Helping people to stay in their homes
This helped avoiding (disposable income )
inequalities to increase during the crisis

10. Inequalities should remain a policy concern
beyond the recovery (1/3)
1. The crisis is likely to exacerbate labour
market inequalities
• Low-skilled workers: triple whammy: less
likely to work from home, more likely to
lose their job and to experience longer
UNR spells
• Non-standard workers: up to 60% in
sectors most affected; less protected by
existing social safety nets

11. Non-standard workers over-
represented in most affected sectors ….
Non-standard workers in sectors most affected by the shutdown across European
OECD countries,
% of employment, 2019
Note: Non-standard workers are identified as workers in temporary contracts, in part-time jobs, and the self-employed.
The sectors considered are: hotels and restaurants, wholesale and retail, Arts, entertainment and other services,
Professionals and real estates, and construction.
Source: OECD (2020), “Distributional risks associated with non-standard work: Stylised facts and policy considerations”
Tackling coronavirus series.
0
10
20
30
40
50
60
70
80
Percent

12. …all the more among low-wage
employees
0
4
8
12
16
20
24
Construction Wholesale and Retail Trade
Hotels and Restaurants Professional and Real Estate services
Arts, Entertainment and other services Total
Proportion of low-wage non-standard workers in sectors most affected by the shutdown
across European OECD countries, 2018
% of dependent employment in affected sectors
Note: Low wage employees are those in the first quintile of the employees' wage distribution..
Source: OECD (2020), “Distributional risks associated with non-standard work: Stylised facts and policy
considerations”, Tackling coronavirus series.

13. Inequalities should remain a policy concern
beyond the recovery (2/3)
2. The crisis is likely to inflict long-term
damage through scarring effects
• Women: 2/3 of the health force; higher work
burden at home; higher chances of dropping out
• Youth: surge in unemployment and NEET
• Children and youth from disadvantaged
backgrounds / places: disproportionately affected
from school closures and e- learning

14. Women have been facing high health and
economic risks from the COVID crisis
Women in contact-intensive sectors across OECD countries,
% of employment in contact-intensive sectors, 2019
Source: Employment by Activities and Status (ALFS).
0
10
20
30
40
50
60
70
80
90
100
Wholesale and retail trade Accommodation and food
Education Human health and social work
Art and entertainment Total

15. Women are overwhelmingly more likely to
move from job to inactivity
Worker flows from job to inactivity to fulfil domestic tasks, by gender
% of employment, 2019
Note: Flows from employment to inactivity to fulfil domestic tasks are relative to average employment between the tw
years, by gender.
Source: EULFS.
0
1
2
3
4
5
Percent
Female Male

16. COVID-19 risks leaving damaging scars for
younger generations…
Scarring effects from the 2008 recession
Labour market transitions from studying, 2007-019
60
80
100
120
140
160
180
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
From study/training to employment From study/training to unemployment
Note: The transition from study to employment from t to t+1 is computed as a share of the total students/trainers
in the period t. The transition from study to unemployment from t to t+1 is computed as a share of the total
students/trainers in the period t. The transition from employment to study from t to t+1 is computed as a share of
the total employment in the period t.
Source/ EULFS

17. … unemployment increased three times
more among youth than prime-aged
Changes in the unemployment rate between 2019 and 2020
Note: OECD short-term labour market statistics
-2
0
2
4
6
8
10
CAN
LTU
EST
USA
CHL
SVN
LUX
ESP
PRT
FIN
SWE
SVK
OECD
avg
IRL
AUS
NLD
CZE
LVA
AUT
DNK
NOR
HUN
ISR
ISL
NZL
BEL
POL
JPN
CHE
FRA
KOR
ITA
TUR
GRC
pp
Youth Prime-aged

18. Inequalities should remain a policy concern
beyond the recovery (3/3)
3. The crisis may exacerbate pre-existing
“K/Y” disequalising trends :
• Acceleration of digitalization and automation
displacing low/ middle skilled jobs
• Reallocation of economic activity towards
large dominant firms
• Change in asset prices // stock market
increases <wealth inequality, top shares

19. POLICIES CAN MAKE A
DIFFERENCE: ACTION
STARTS NOW

20. Policy “toolkit” for inclusive growth
Medium-term orientation
1. Education and training from childcare to
adult– reach disadvantaged people and places
2. Competition – address market power and
encourage the entry of innovative firms
3. Active labour market policies, job and social
protection – curb segmentation and insecurity,
target job quality alongside quantity
4. Taxes and (cash and in-kind) transfers – affect
both pre- and post-redistribution outcomes

21. Tailoring the toolkit to country-
specific context and challenges
Selected policy recommendations for France
• Speed-up the development of childcare services in poor neighborhoods
• Ensure access to information and monitoring of the quality of lifelong
learning programs through strengthened evaluations and counselling
• Restructure labour costs to reduce the excessive use of short-term contracts
Source: Going for Growth 2021, @ oecd.org/economy/going-for-growth/
Selected policy recommendations for Germany
• Increase the minimum amount of time that the second parent has to take
parental leave for the couple to receive the maximum leave entitlement
• Lower the tax burden on the wage income of second earners
• Remove tax exemptions on inheritance and capital income
• Increase the provision of social housing in cities and urban areas

22. Tailoring the toolkit to country-
specific context and challenges
Selected policy recommendations for the US
• Increase spending on ALMP such as job placement and
support to geographical mobility, broaden training
programs for displaced workers
• Raise federal minimum wage
• Expand the use of apprenticeships and on-the-job training
• Require paid parental leave
• Outlaw the use of non-competes except where employers
can prove benefit to workers
• Reduce unnecessary legal restrictions to people with
criminal records obtaining occupational licenses
Source: Going for Growth 2021, @ oecd.org/economy/going-for-growth/

23. Thank-you!
orsetta.causa@oecd.org