MILAN – Economic policymakers around the world have struggled to stem rising inequality – a trend that has impeded economic growth, fueled populist electoral victories, and jeopardized liberal democracy. It was thus widely and understandably feared that unskilled workers would suffer deeply as a result of the COVID-19 crisis and, more recently, the energy-price shock that followed Russia’s full-scale invasion of Ukraine. But, in both cases, the impact has been relatively benign.
After the initial pandemic shock in early 2020, economies and job growth rebounded strongly. Thanks to the robust recovery, together with far-reaching government support programs, income inequality fell by most measures, especially in the United States, owing to substantial cash transfers to households, but also throughout Europe, where government income support was more moderate.
