Trends in Income and Well-Being Inequality During the COVID-19 Pandemic in Japan

Although the COVID-19 pandemic could have caused both monetary and non-monetary distributional changes, existing studies have only investigated its immediate monetary impacts. This study examines the pandemic's medium-term impacts on income and well-being inequality using individual longitudinal data from the Japan Household Panel Survey. Gini coefficients and income mobility before and after the pandemic are calculated to analyze income inequality. Various well-being measures such as mental health and life satisfaction are used to analyze well-being inequality. The findings reveal no increase in income inequality. Progressive income growth ensured stable inequality throughout the pandemic. Conversely, on average, well-being worsened, and well-being inequality increased. Furthermore, we find an association between income and well-being inequality. The random-effects and fixed-effects models indicate that the well-being of the high-income group tended to improve, whereas that of the low-income group tended to deteriorate after the outbreak of the pandemic. Additionally, the causal mediation analysis shows that the adoption of remote work served as a factor for the increase in the well-being of people in the high-income group. Remote work became disproportionately prevalent during the pandemic, especially among people in the higher income group. This group experienced various benefits of remote work, which contributed to an improvement in their well-being and an increase in well-being inequality.