pandemic on poverty and inequality within countries (Clark et al. 2021, Lastunen et al. 2021, Lustig et al. 2021, Palomino et al. 2020).

We find that the world in 2020 witnessed the largest single-year increase in global inequality and poverty since 1990, when our study begins. When compared against a counterfactual without COVID-19, we find that the pandemic increased the global Gini index by 0.7 point and pushed an additional 90 million people into extreme poverty---measured as having a daily income or consumption less than $2.15 per capita. Put differently, we observe an increase between 2019 and 2020 by 0.5 Gini points and 71 million poor people. However, the pandemic also prevented a reduction in global inequality of about 0.2 Gini points and 19 million people from moving out of poverty. The net impact of the pandemic is the sum of the two effects. To put this in perspective, the only other marked increase in global inequality and poverty in the last three decades happened during the Asian financial crisis when the global Gini index increased cumulatively by 0.7 point between 1996 and 1999 and global extreme poverty increased by 0.2 percentage point or 37 million people. The pandemic-driven increase in global inequality and poverty reverse declines that have taken three years to accomplish. The uptick in global inequality is driven by increases in inequality between countries, reflecting that the shock to mean welfare was larger in poorer countries. Likewise, the uptick in extreme poverty was driven mostly by shocks to average incomes and not by changes to inequality within countries.

A secondary contribution is to provide annual estimates of global inequality from 1990 to today. Since not every country has a household survey in every year, we have to interpolate and extrapolate household surveys such that we cover all 218 countries in every year. This approach is similar to the methodology used for reporting global poverty by the World Bank (see Prydz et al. 2019 and Ferreira et al. 2016). Previous studies, such as Lakner and Milanovic (2016), Milanovic (2002, 2016, 2021) and Ravallion (2014), on the other hand, used the household surveys directly. As a result, these papers were able to provide estimates only for selected benchmark years (e.g. every 5 years). For instance, Milanovic (2021) has 131 countries in the global distribution benchmarked to 2013, which includes surveys conducted between 2011 and 2015. While our approach requires additional assumptions, it allows us to provide (i) global inequality measures that are consistent with the global poverty measures, and (ii) annual estimates of global inequality.

Our estimates of global inequality measure the inequality between all citizens of the world, following _Concept 3_ inequality as defined by Milanovic (2005). In this concept of global inequality, individuals are ranked according to their personal income no matter the country they reside in.<sup>2</sup> Other authors have looked at the cross-country dispersion in GDP per capita – unweighted or weighted by population ( _Concept 1_ and _2_ , respectively, in the Milanovic taxonomy). For example, Deaton (2021), using per capita GDP growth rates, finds that _concept 1_ inequality decreased whereas _concept 2_ inequality increased. The difference in his findings is due to accounting for population size in the latter concept. These studies do not account for the withincountry inequality which is accounted for by our paper. Another difference is that we measure

> 2 Anand and Segal (2008) review the evidence on global inequality and its measurement issues. In a recent paper, Kanbur et al. (2022) focus on the future direction of global inequality, in particular between-country differences.

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