# **1. Introduction**

There is mounting evidence that the COVID-19 pandemic has had not only a devastating impact on poverty and well-being worldwide, but also that this impact has not been equally distributed both across and within countries. Globally, those with per-capita incomes between $1.9/day and $5.5/day are estimated to have experienced the largest income drops (Narayan et al., 2022). Data from High Frequency Phone Surveys (HFPS) collected by the World Bank throughout the pandemic shows that respondents in Low- and Middle-Income Countries are reporting higher rates of work stoppages and income losses compared to High Income Countries (Bundervoet et al., 2021; Narayan et al., 2022). Ferreira et al. (2021) estimate tradeoffs between health and poverty impacts across countries and show that the number of years in poverty resulting from the pandemic is inversely correlated with the country’s GDP per capita.

Evidence on the impacts of COVID-19 on inequality, both within countries and globally, is more difficult to obtain because of the more stringent data requirements. But there is still consistent evidence that within countries, women, youth, and those with lower levels of education or more precarious connections to the labor market were more severely affected, in terms of job or income losses, by the restrictions to economic activity. This occurred due to several reasons, including the types of jobs they have, their ability to perform work remotely, or the nature of demand for their services (Hill and Narayan, 2020). Access to continued learning during the periods of school closures has also been strongly and positively correlated with GDP per capita across countries, and with the level of parental education within countries. This means that children in poor countries, and in poor households within those countries, were less able to engage in meaningful learning over a significant amount of time (Narayan et al., 2022). These disruptions in learning are estimated to have had dramatic effects in terms of learning losses (Azevedo et al 2021).

The patterns of COVID-19 impacts described above are short-term impacts observed throughout 2020 and 2021. Estimates that try to quantify the short-run changes in income inequality due to the economic impacts of COVID-19 suggest that these impacts are likely to be, on average, small in magnitude, and short-term increases in inequality during the 2020-2021 are not universal (World Bank, 2022). In countries for which high-frequency phone survey data from the pandemic period are available, the Gini index of inequality is estimated to increase by about 1 point on average because of the pandemic’s short-run impacts on labor incomes (Narayan et al., 2022, World Bank, 2022). However, there is a concern that the inequality impacts of the pandemic will be amplified over the medium to long-term by learning losses due to school closures, which is likely to lead to a highly unequal pattern of losses in human capital formation across socio-economic groups, whose impacts are likely to last through the life-cycle.

The main goal of this paper is to explore these medium-to-long term inequality impacts of the COVID-19 pandemic through the education channel. Specifically, we study inequality traps by estimating the impact of the learning losses associated with school closures on inter-generational mobility in education, which we consider to be useful proxies for measuring the longer-term impacts of pandemic-induced school disruptions in a country. Following Narayan et al (2018), we consider two concepts of intergenerational mobility of the many that have been used by the economic literature over the years: _absolute upward mobility_ (absolute mobility for short) that measures the share of individuals who surpass the education of their parents, and _relative mobility_ that captures the degree to which individual socioeconomic outcomes are independent of the outcomes of one’s parents (Van der Weide et al., 2021). These indicators reflect two broad concepts of economic mobility in a society – absolute progress, which also reflects the aspiration every parent has for their children; and fairness, whereby one’s chance of success in a society is not dependent on the circumstances of one’s birth.

These indicators are useful measures of societal progress in a broad sense. Higher absolute upward mobility across generations is closely associated with income growth and a rise in well-being of those at the bottom of the economic ladder that enables escape from poverty traps. Higher relative mobility across generations is 2