## When Inequality is High, Pandemics Can Fuel Social Unrest

_IMF Blog, December 11, 2020_

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## Bibliographic details
- Authors: Tahsin Saadi Sedik, Rui Xu
- Published: December 11, 2020

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### Scope and data
- Analysis covers past major pandemics in 133 countries over 2001–18: SARS in 2003, H1N1 in 2009, MERS in 2012, Ebola in 2014, and Zika in 2016.
- Social unrest measured using the International Country Risk Guide’s civil disorder score (a high frequency and cross-country measure).
- Research presented in an IMF staff working paper and summarized in the IMF blog Chart of the Week (December 11, 2020).

### Methodology
- Two complementary econometric approaches:
  - Monthly-frequency analysis: uses monthly social unrest and pandemic data to estimate how the level of social unrest responds to exogenous pandemic events; establishes a direct link between exogenous pandemic events and civil disorder (expressed as a score).
  - Annual-frequency analysis: explores channels through which past major pandemics lead to social unrest in the medium term, focusing particularly on inequality and economic growth.

### Key empirical findings
- Social unrest increased consistently following each of the listed outbreaks.
- The International Country Risk Guide’s civil disorder score increased significantly, on average, one year after the pandemic.
- Past major pandemics led to a significant increase in social unrest in the medium term by:
  - Reducing growth, and
  - Increasing inequality.
- The interaction between these effects forms a vicious cycle:
  - Higher social unrest is associated with lower growth, which worsens inequality, reinforcing further social unrest.

### Heterogeneity and thresholds
- The effect of pandemics on social unrest is stronger when pre-existing income inequality is high.
- An increase in the net (post-tax and transfer) Gini coefficient is associated with more social unrest when the initial level of the net Gini is above 0.4.
- More than 45 percent of countries in the world have a net Gini coefficient higher than 0.4.
- About one-third of Asian economies have a net Gini coefficient higher than 0.4.

### Role of redistributive transfers
- The impact of inequality on social unrest depends on the extent of redistributive transfers.
- An increase in inequality is associated with more unrest when redistributive transfers are low.
- This suggests that social safety measures and redistributive transfers help reduce social tensions.

### Policy implications and recommendations
- Policymakers need to pay special attention to preventing scarring effects on the livelihoods of the most vulnerable in their societies.
- Targeted social safety measures and redistributive transfers can mitigate the link between rising inequality and social unrest after pandemics.
- Historical trends do not pre-determine outcomes; appropriate policy action can change trajectories.

*Source: IMF Blog — “When Inequality is High, Pandemics Can Fuel Social Unrest” (December 11, 2020).*

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## References

- [IMF staff working paper](https://www.imf.org/en/Publications/WP/Issues/2020/10/16/A-Vicious-Cycle-How-Pandemics-Lead-to-Economic-Despair-and-Social-Unrest-49806)
- [Regional Economic Outlook for Asia-Pacific](https://www.imf.org/en/Publications/REO/APAC/Issues/2020/10/21/regional-economic-outlook-apd)

_Source: https://www.imf.org/en/blogs/articles/2020/12/11/when-inequality-is-high-pandemics-can-fuel-social-unrest_