The Effect of the 1918 Influenza Pandemic on Income Inequality: Evidence from Italy

Abstract

We estimate the effect of the 1918 influenza pandemic on income inequality in Italian municipalities. Our identification strategy exploits the exogenous diffusion of influenza across municipalities due to the presence of infected soldiers on leave from World War I operations. The measures of income inequality come from newly digitized historical administrative records on taxpayer incomes. We show that in the short/medium run, income inequality is higher in municipalities more afflicted by the pandemic. The effect is mostly explained by an increase in the share of income held by the rich to the detriment of the other strata of the population.

Pandemics and financial development: A lesson from the 1918 influenza pandemic

“…Non-pharmaceutical interventions, such as quarantine, were found to be associated with a relatively better economic performance by Correia et al (2020) and Barro (2020). Several scholars have conducted regional studies to variously show that the 1918 pandemic increased poverty rates and decreased returns to capital in Sweden (Karlsson et al, 2014), decreased GDP per capita in Italy (Carillo and Jappelli, 2020), and increased income equality in Italy (Galletta and Giommoni, 2022). The pandemic had long-term negative effects on human capital (Acemoglu et al, 2007;Percoco, 2016) and literacy rates (Guimbeau et al, 2022).…”

The Political Effects of the 1918 Influenza Pandemic in Weimar Germany

“…The pandemic had negative consequences for GDP growth (Barro et al, 2020;Carillo and Jappelli, 2022) which were mostly short-lived (Velde, 2022;Dahl et al, 2022). Negative employment and income effects are typically found especially at the lower end of the income distribution, leading to increases in inequality in Italy, Spain, and Sweden (Karlsson et al, 2014;Basco et al, 2021;Galletta and Giommoni, 2022). However, high mortality rates also resulted in labor shortages that increased wages in the medium-run (Garrett, 2009) and female labor force participation in the short-run (Fenske et al, 2022).…”

Review of Gini Ratio on Economic Growth with Human Mobility Mediation during Indonesia's Covid-19 Era

“…The occurrence of this pandemic can also affect the Gini ratio. Galletta and Giommoni (2020) researched the Spanish flu pandemic which increased income inequality in society.…”