Effects of income inequality on COVID-19 in Africa: a cross-country analysis

Abstract

Abstract The empirical literature has been unexplored regarding the analysis of transmission channels in the study of the relationship between income inequality and COVID-19 spread. The aim of this paper is to fill this gap by empirically assessing the direct and indirect effects of income inequality on COVID-19 by focusing on a sample of 52 African countries. To achieve this goal, we use the multiple linear regression model and the ordinary least square (OLS) method. In addition, two indicators of COVID-19 are identified, namely the total number of cases and the severity of the disease, as well as two transmission channels, namely the size of the informal sector and literacy. The results of the direct analysis show that income inequality positively and significantly affects the spread of COVID-19. Although the indirect analysis supports the positive and significant effect, it appears that the estimated coefficients are underestimated in the direct analysis. The results of the direct analysis are robust to the year 2021 and 2022 while the indirect analysis is robust to the use of interactions between income inequality and the different channels. These results suggest that reducing the income gap between individuals is key to effectively coping with health shocks. JEL classification: I10 . D63 . C30