Ever since the dawn of mankind, pandemics have been a threat to our survival. From the Justinian Plague to the Polio epidemic, one only has to look back through history to see examples of devastating diseases ravaging populations. Now, in the 21st century we face another pandemic: Covid-19 has killed thousands and disrupted the lives of billions more, and there is extreme uncertainty about the economic consequences.

In that light, it is important to try and understand as much as we can about the possible effects of Covid-19. Many have turned quickly to the history books: many will have seen the articles comparing Covid-19 to the Spanish Flu or the Black Death. However, this comparison is largely invalid. While there will be some consequences shared by both Covid-19 and previous pandemics, the major economic consequences of Covid-19 will be like nothing we have seen before.

The first important area to examine is the labour market. Unemployment has soared world-wide since the start of Covid-19. It has been hard to miss the record-breaking US unemployment figures; many have presumed that this is simply a natural consequence of pandemics. This is anything but the truth. Almost every other pandemic in history has caused a surge in employment and wage prices. For example, in the aftermath of the Black death wage growth increased drastically (see Figure 1); the small delay in wage increases immediately after the Black Death is the result of the 1351 Statute of Labourers, which prevented wage rises in the immediate aftermath of the pandemic. Other pandemics such as the Justinian Plague had similar economic effects. Even the Spanish Flu caused some wage growth, despite the recession that followed at the start of the 1920s. The reason for such a serious divergence in the consequences is the mortality rate and the speed of the response. The Black Death was a highly fatal disease; in the 6th century they didn’t have the knowledge to treat people for the Justinian plague; the Spanish Flu was able to kill 50 million because lockdown didn’t happen fast enough. For the first time we are seeing the economic effects of a shutdown of human activity; previous pandemics have shown us only the economic effects of a large number of deaths.

The labour market is not the only area where Covid-19 will have a fundamentally different impact to those of previous pandemics. Inequality is almost certainly on the rise as a result of this pandemic. As Joseph Stiglitz acknowledged, those who were less well off before the pandemic are much more likely to be seriously affected. They are often working in low-skilled jobs that cannot be performed from home, meaning that they will lose their source of income. Often their children won’t have access to the technology they need to keep up with their schooling, causing them to fall behind their peers who do. There is no doubt that Covid-19 will exacerbate inequality. It is perhaps surprising then that previous pandemic haven’t always done this. In fact one of the most devastating pandemics in history, the Black Death, had entirely the opposite effect: inequality went down. Yet while this may sound positive, it was for the most morbid of reasons. As the historian Walter Scheidel puts it “the observed improvement in living standards of the labouring population was rooted in the suffering and premature death of tens of millions over the course of several generations.” As the number of labourers decreased, as discussed above, the ratio of land to labourers shifted. This resulted in landholders becoming less well off as they were forced to spend more on labour, while labourers became better off as they earned more, reducing inequality. Interestingly though, while the Spanish Flu had similar effects to start with in terms of inequality (wages rose, inequality decreased), the generation born during the flu had significantly lower lifetime incomes and socioeconomic status than those born directly before or after the flu. Yet for the most part, past pandemics have created equality for those who lived through them; Covid-19 is completely different. As Emily Maitlis put it, this disease “is not a great leveller”; past pandemics have been.

All of this is not to suggest that there is no use comparing Covid-19 to past pandemics. In fact, the likely inflationary consequences of this pandemic bear stark similarities to previous pandemics. Even in the 6th century the causes for this can be seen; the Justinian plague caused a massive drop in supply, while demand picked back up again fairly quickly. So bad was inflation in the Byzantine empire in the years following the plague that the emperor Justinian was compelled to issue an edict fixing prices at pre-pandemic levels. The Black Death had similar consequences; prices rose steeply as a result of the dramatic fall in supply caused by the loss in labour. Covid-19 is increasingly looking like it will follow this path. Fiscal stimuli are, unlike in 2008, going directly into the real economy, even as supply is falling drastically. Future fiscal and monetary measures will increase demand even as supply continues to dwindle, creating the possibility of serious inflation. Therefore, while the direct cause of the inflation that will likely follow this pandemic is different, inflation is a notable feature of pandemic economics throughout history.

There are certainly some similarities in the effects of this pandemic to previous pandemics, and it would be foolish to avoid the historical context. Yet in the past, the economic effects of pandemics have been caused by sickness and death. This time, the economic effects are likely to come from what, in a 2008 report, the World Bank called “efforts to avoid infection”, which they said are likely to be far worse than the costs of just sickness and death. Saving human lives is much costlier than letting people die, and for the first-time governments are being forced to make that choice.

An earlier version of this article won the 2020 Keynes Prize, the Eton College Economics Department’s annual essay competition for sixth form.