# **Introduction**

Although the COVID-19 pandemic started as a health crisis, the economic shutdowns and downturns that it entailed have had catastrophic economic consequences. The shutdowns also implied a halt to much of the data collection done by national statistical offices, which has led to a lack of information on the magnitude of the economic consequences (United Nations and World Bank 2020). At the country level, it is unclear which parts of the distribution were most hurt by the pandemic. This lack of distributional evidence has made it difficult to understand whether broad-based growth policies should be preferred over policies prioritizing the worst off. At the global level, it is unclear where the economic consequences of the pandemic have been most severe, which matters for targeting of emergency funds across countries for international organizations, international NGOs, and development agencies.

In this paper, we triangulate various data sources available to get a global picture of the impact of the pandemic on inequality and poverty in 2020. We use welfare distributions for 2019 covering 168 countries comprising more than 97% of the world’s population from the World Bank’s Poverty and Inequality Platform (PIP) as our starting point. To obtain estimates for 2020 we use published traditional household surveys available for 20 countries and tabulated household income statistics available from national statistical offices for a further 8 countries. We complement them with a simulation exercise using High-Frequency Phone Surveys (HFPS) for 37 countries. The HFPSs were conducted in a large number of developing countries to provide a real-time picture on the pandemic. While these surveys do not contain information on households’ level of income, they do include information on whether households gained or lost income. We use this information together with household characteristics and sectoral national account data to estimate the pandemic’s distributional impact. For 26 countries that do not have any of the above three sources of data, we rely on estimates from simulations published in the literature or provided to us by World Bank teams. For the rest of the world, covering roughly 18% of the global population, we utilize growth in national accounts (disaggregated by economic sector where possible). We combine these various data sources to estimate the global income distribution in 2020.<sup>1</sup> To isolate the impact of the pandemic, we compare our actual 2020 distribution with a counterfactual 2020 distribution which assumes that countries in 2020 experienced no distributional change and the economic growth that was forecasted before the pandemic spread.

This paper provides the first estimates of the impact of the pandemic on global inequality and poverty that explicitly account for the distributional impact of the pandemic. Earlier work on global inequality (such as Deaton 2021) and global poverty (such as Lakner et al. 2022, Valensisi 2020, Sumner et al. 2020) did not account for within-country inequality or used general equilibrium models (Laborde et al. 2021). Several cross-country studies estimate the impact of the

> 1 Our global distribution combines income and consumption data. For simplicity, we refer to it as the global income distribution throughout.

2