Income Inequality, Debt Burden and COVID-19

71 Pages Posted: 5 Jul 2020 Last revised: 2 Sep 2021

See all articles by Tetiana Davydiuk

Tetiana Davydiuk

Carnegie Mellon University - David A. Tepper School of Business

Deeksha Gupta

Carnegie Mellon University

Date Written: July 2021

Abstract

There have been stark differences in the ability of low-income and high-income individuals to protect themselves during the COVID-19 pandemic. Using a triple difference specification, we document that debt burdens contribute to this inequity by disproportionately increasing the cost to low-income individuals of reducing their mobility after the start of the pandemic. This effect is stronger in counties located in states with residential mortgage recourse. Furthermore, the debt burden channel is exacerbated for Black/African-American and Hispanic/Latino borrowers. Additionally, we provide suggestive evidence that this debt burden channel could have contributed to 2.71% more COVID-19 cases.

Keywords: debt burden, inequality, mobility, coronavirus, COVID-19, pandemics

JEL Classification: D63, E64, G51, I14, J15

Suggested Citation

Davydiuk, Tetiana and Gupta, Deeksha, Income Inequality, Debt Burden and COVID-19 (July 2021). Available at SSRN: https://ssrn.com/abstract=3641965 or http://dx.doi.org/10.2139/ssrn.3641965

Tetiana Davydiuk (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Deeksha Gupta

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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