The impact of Covid-19 on consumption and income inequality

The Covid-19 pandemic has had large economic consequences in the US, directly contributing to soaring unemployment and massively depressed demand. Such rapid changes in household economic characteristics can certainly affect earnings, income, and consumption inequality. In this paper, we try to address two main questions: (1) what is the impact of Covid-19 on earnings and consumption inequality, and (2) can fiscal interventions help address the potentially negative impact? To answer the first question, we assess the impact of Covid-19 at the national and state levels of inequality. We assess role of the intensity of Covid-19 on inequality by exploiting variations across states in the number of infections and deaths due to Covid-19. To address the second question on the impact of fiscal stimulus on inequality, we exploit the variation across US states in the amount of unemployment benefits.