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COVID-19-induced Human Capital Shocks, Lifetime Labor Productivity, and Inequality


Using a human capital model with stochastic lifetimes, this study assesses the potential long-term impacts of human capital spending shocks in the early years of the COVID-19 pandemic on survival, lifetime income, and inequality. In the model, health and education spending separately affect survival rates and potential labor productivity, allowing the authors to trace how the pandemic’s effects may propagate through the economic lifecycle. Using recent National Transfer Account estimates for the Philippines, simulation results suggest that the COVID-19 pandemic is likely to negatively affect health and labor productivity, potentially worsening income inequality in the long run. These impacts appear to be more pronounced for some birth cohorts.

Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.


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