Children will pay the highest price for the pandemic in Brazil

Children will pay the highest price for the pandemic in Brazil

Impact on the income of future generations could reach 9% of GDP; this is one of the conclusions of the panel “A Pandemic of Inequality”, promoted by BrazilLab at Princeton University in partnership with IMDS

Brazilian children will pay the highest price for the pandemic in the country and will be part of future generations that may have an income gap with a present value equivalent to up to 9% of GDP, as a result of unequal access to technology and the consequent negative impacts on their education. The projection was presented by renowned economist and researcher Ricardo Paes de Barros, professor at Insper and member of the advisory board of IMDs – Institute for Mobility and Social Development. Paes de Barros participated in the panel “A Pandemic of Inequality”, promoted by BrazilLab at Princeton University in partnership with IMDS, alongside Professor Angus Deaton, Nobel Prize in Economics in 2015 and a professor at Princeton (see the full event here). The panel was moderated by Professor Thomas Fujiwara, associate director of BrazilLab.

Paes de Barros, or PB, as he is commonly known and who signs the study presented with economist Laura Muller Machado, also from Insper, says that the strongest legacy of the pandemic will essentially fall on the new generations, the children of today. “It will be a new inequality”, he says, explaining that, impacted by unequal access to education, especially due to low access to technology, these citizens will have lower income in the future, which will contribute to increase inequality even more. He adds that the current generation should try to pay that price, and not leave it to the future.

In his presentation (download slides here), PB also explains how the Covid-19 pandemic currently affects older age groups worldwide, but that, in Brazil, there are peculiar aspects that draw a lot of attention. “For every dollar spent on children, 6 dollars go to the elderly,” adding that this is unparalleled in any other country.

PB points out two major and challenging impacts of the pandemic on inequality: first, some lost their jobs, others did not; second, those who lost their jobs are more likely to belong to sectors that pay lower average wages. He also spoke about the drop in total income, which was 8%, or 3% of GDP, alleviated by emergency aid of a similar magnitude. “But who is going to finance this? Public deficit,” he explained. “And who will pay that bill? Today's children, particularly when they enter the workforce,” he added. PB estimates that this educational gap has the potential to impact the present value of total income by 9% of GDP, if nothing is done at present to compensate for it.

Professor Angus Deaton welcomed the initiative by BrazilLab and IMDS, which brought together the perspectives of the USA and Brazil. “They are two of the most unequal countries in the world, both suffering a lot from Covid-19,” he said.

Deaton recalled that recessions, in general, affect men more, but that in this pandemic this has been reversed. “It's worse for women,” he said, also pointing to school-age children as severely disadvantaged. But he recalled the “robust transfers of resources from governments”, and that in the US the indicators seem to converge towards an alleviation of inequality. “But these aids have an expiration date,” he added.

Deaton also discussed the impacts on inequality arising from educational disadvantages, comparing, for example, life expectancy between those who have and those who do not have a college degree in the US. He also detailed these impacts across ethnic groups and highlighted the differences between rich and poor in the pandemic.