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Title: Inequality In India Declined During COVID

Authors: Anup Malani, Arpit Gupta, Bartosz Woda

Discussant: Neelanjan Sircar

We conducted the 17th Consumer Pyramids Research Seminar on 3rd March 2022 at 07.00 PM IST.

Event Summary

Prof. Anup Malani from the University of Chicago Law School presented a paper on adverse economic effects of the COVID-19 pandemic in India, with his co-authors Bartosz Woda and Arpit Gupta. Over 100 individuals attended the seminar and contributed questions and comments. The presentation highlighted findings on poverty and inequality during and following the COVID-19 lockdown in India.

While there are several studies on increases in poverty and disproportionate effects of the pandemic on the poor, some of the global literature suggest otherwise. This study found that poverty and inequality spiked during the lockdown period. Following the lockdown, however, the authors found that poverty continued to rise while income inequality declined. A slight decline in consumption inequality was also identified. Prof. Malani discussed the robustness of the findings with regard to non-response, response probabilities, and different income quartiles. The authors emphasize that these findings are not causal in nature and propose that the decline in inequality began prior to the pandemic. The presentation also highlighted possible mechanisms behind these findings. The business income of the rich may have been more sensitive during this period and demand for labour was found to be lower among the rich.

Dr. Neelanjan Sircar served as discussant for the paper. He raised the question of whether there was a structural break in income inequality before and after the lockdown. Dr. Sircar also proposed looking further into the difference in urban and rural labour supply within specific sectors such as agriculture. The idea of varying risk preferences across income groups was highlighted as a facet of differential labour supply across income groups, which could play a role in income inequality.

The session closed with Prof. Malani responding to some of the comments and questions raised by Dr. Sircar. Dr Arpit Gupta, a co-author of the paper, responded to over 20 questions posed by the audience throughout the presentation.