Guido Alfani is a professor of economic history at Bocconi University, Milan, and an affiliated scholar at the Stone Center. He has written extensively on inequality in preindustrial Europe, the role of famine in European history, and the effect of epidemics on inequality and mobility. He recently spoke to the Stone Center about his latest paper, “Epidemics, Inequality, and Poverty in Preindustrial and Early Industrial Times.”

In your paper, you discuss the impact of epidemics on inequality and poverty. Are there any lessons from the past that are applicable to what we’re experiencing now, with Covid-19?

Alfani: There was this idea, especially at the beginning of the Covid-19 pandemic, that a large-scale pandemic can reduce inequality — which is true, but it’s true mostly in the historical case of the Black Death in the 14th century. You do not observe this even with other plagues, like the ones that struck in the 17th century, which had a magnitude comparable to that of the Black Death in terms of mortality rates. The Black Death reduced inequality because it resulted in a lot of deaths. But not all plagues or pandemics, even those that kill a lot of people, lead to reduced inequality.

The context prevailing before the pandemic strikes is the key in mediating its impact. When we talk about plague, we talk about a kind of epidemic or pandemic that is very different from Covid-19. But looking at it allows us to focus on the determinants of the distributional impact of a pandemic. Mortality rates are important, because the shock to the labor market that can be produced by a pandemic depends on how many workers die, basically. If a pandemic kills half of all workers, it’s possible that labor becomes scarce, and then the survivors have an advantage. But if the pandemic results in a low number of deaths while still creating a condition in which you have a huge disruption of the economy, then another force, which is that of losing jobs — because, for example, the country is shutdown, there are lockdowns — can prevail. And in fact, you could obtain the opposite result of increasing inequality, which might have been the case of the Spanish Flu in 1918. 

Did the Black Death result in reduced inequality simply because so many workers died that wages went up?

Alfani: A pandemic or epidemic can reduce poverty in two ways: first, by redistribution, which probably was the prevailing mechanism of the Black Death, both because the poor who survived earned larger wages after the event, and some might have inherited resources from richer relations who died. But the other mechanism is that if you factor in some selectivity by socioeconomic status, which as far as we know was the case for plagues and other epidemics from at least the late 15th century onward, the fact is that a pandemic can also reduce poverty in a society causing more deaths among the poor than in other strata.

How did changing institutions affect the impact of pandemics and epidemics in the centuries after the Black Death?

Alfani: The Black Death is the prototypical example of an exogenous shock caused by a pandemic that takes everybody unaware — because society is caught completely unaware, the pandemic can create a great change. But when the plague struck again in the 17th century, inequality didn’t decline. The richest families were ready. They had protected their patrimonies against fragmentation caused by inheritance, establishing that the bulk of the patrimony would be transferred undivided to descendants. And that’s key, because if the top 5 percent of the distribution is stable, that basically fixes the Gini index [in place] to a large extent. If wealth doesn’t trickle down from the very top, then what can happen in terms of inequality reduction is, in fact, quite limited.

This stability in inequality after a large-scale plague is the paradoxical consequence of societies building resilience against pandemics. It’s paradoxical only if you forget how societies are organized — the wealthy elite is very closely connected with, if not the same as, the political elite in places like the Republic of Venice. In that context, what you really want to do is to protect your lineage, because individual survival is not assured. You know that a pandemic could kill half the people you know, and maybe you as well. So it’s not “Protect me, protect my son,” it’s “Protect the lineage.” You protect the patrimony, and you establish institutions or use institutions to do that. Most of the richest families did exactly that in different ways, in different parts of Europe, but the aim was the same.

Your paper also discusses the impact of cholera in the 19th century. How was that a different case from what had been seen before?

Alfani: With cholera, we have another very interesting example of institutional change triggered by the emergence of a new pathogen. Because, again, cholera is a new thing. It reaches the West as a new pathogen. Nobody knows what it is. At the beginning, people start implementing the policies they used earlier against plagues, because that’s what they know.

But then, when they understand finally that cholera spreads through contaminated water, we see the building up of consensus about doing something that might serve the interest of the political elite, because nobody wants cholera in their city. But the main beneficiaries were the poorest strata. So here you have a pandemic threat that appears, and that allows people to do something which wouldn’t have been possible otherwise.

And this, I think, is also the case for the European Recovery Plan for Covid-19. The European states don’t easily agree on this kind of collective action. But faced with this new threat, they managed to do it, so it’s another example of the emergence of a new pathogen that changes the political context. At the time of cholera this allowed for, first, an action in public health. But if you reduce health inequality, in time you’ll also reduce economic inequality, because you will increase the opportunities of earning income, especially for the poorest.

Looking at these different historical examples — the Black Death, the return of the plague in later centuries, cholera, the Spanish Flu — what would you say our ongoing pandemic is likely to resemble most closely? Do you think we’re likely to see any reduction in inequality, thanks to collective action in Europe, for example?

Alfani: In terms of seeing positive change, I think the unexpected ability of European states to cooperate against the pandemic is good. Of course it’s good if you believe in the European Union, but also it’s a more general story of having states with competing interests actually managing to find an agreement for the benefit of the people.

In terms of how Covid-19 will tend to impact distribution — Covid-19, leaving aside policies that met needs with income transfers, would have tended to have consequences similar to those of the Spanish Flu, which didn’t result in enough deaths, especially among the poor, to achieve a rebalancing of the labor force and a reduction in poverty. So the opposite factor prevailed, and that’s the inequality-promoting impact of people losing their jobs, beginning, of course, with those who had the least secure jobs, with the poor maybe getting infected more than others, which I believe happened in at least some parts of the U.S. with Covid. That’s also what happened in Milan with plague at the end of the 15th century, and again in London in 1655: the most crowded areas of the cities, which are also the poorest, experienced the largest infection rates and mortality rates.

Even if inequalities before Covid mean that the pandemic results in more deaths among the poor than among the rich or the other strata, presumably the other mechanism will prevail — which increases poverty, because you have joblessness and so forth. But unless you really have excellent data, you can only observe the net result. And is this pandemic really finished? I’m not sure. The pandemic will end the moment when we make the administrative decision that it is an endemic infection. But Covid will not go away.

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