Ever since the spread of corona virus within China and throughout the world, it has

affected the lives of people limiting them with a lot of things from making close contact with
other people, travelling and trading with other countries. Among the changes brought about
by this deadly virus, we can see that the most evident would be in the economy. China is one
of the largest economies in the world. Since we are in an open economy and we exchange
goods and services with other people, it is no doubt that this has also affected countries
around the world. A lot of stores were shut down and also trade and travel between China
and other countries have been restricted. This has stirred fear within the stock market
causing the prices to fall. With the corona virus affecting a lot of companies, it has made
them less profitable which would urge them to lower down their stock prices to encourage
more investors to purchase stocks. But with this decrease in the price also comes a risk in
investing thus, discouraging investors to continue purchasing.

As we all know, large companies around the world are also major owners of stocks in
the market. Thus, in circumstances where stock markets and capital returns increase, these
large companies will benefit more. If we compare this with those people whose source of
income comes from labor, we can see that there would a greater gap between them or
income inequality. With the decrease in stock prices brought about by the corona virus, we
could see that these owners in the stock market would be able to gain less than they have in
the last years from their sale of stocks. This could have no effect to those individuals whose
income come from labor thus a decrease in the income inequality could be seen since there
would now be a lesser gap between them.

Along with this decrease in prices, banks and financial institutions have lowered down
interest rates, a sign that markets are in a panic due to this deadly virus and its effect on the
economy. With low interest rates, people will now have more incentive to save. These could
encourage them to borrow since there would be a decrease in the borrowing rates at the
same time and take loans from the bank since with the effect of corona virus, people are in a
doubt to save since there is a risk due to the declining economy. Also, firms would be able to
get additional investment which could in turn increase output and productivity which could
also have an effect on the wages of individual workers. Increase in productivity would also
mean greater capital returns for firms thus increasing also there income. Thus, we cannot
say that there would be any effect in the income inequality in this circumstance since both
the rich and the poor benefit from this. It all depends on the proportion of change in the
income receive by both ends. If the top-income sector receive greater income than those
below, then this would lead to an increase in the income inequality. In order to have a better
picture of the income inequality we need to calculate the GINI coefficient and use the Lorenz
curve to have a better grasp of the inequality.

In the Philippine context, since there are a lot of companies in the country whose shares
are also publicly traded, it is no doubt that they were also affected by the decrease in stock
prices especially in those companies that were heavily affected by the spread of nCov like
airline companies or those companies in the tourism industry. Just like companies around
the world, this could have the same effect on domestic companies. But this decrease in the
income companies receive could also have an effect on those in the low-income sector since
it could affect the operations of the company and at the same time, wages of the workers.
Also, an effect on the operations could lead to a decrease in the supply firms produce
especially for those whose raw materials have come from China. With this, there could be an
increase in the prices of goods or commodities in the country. This could lessen the
purchasing power of the income individuals receive. Because of this, there could widen the
gap between both ends of the Lorenz curve given that compared to large companies or
those in the top-income tier have only their job as their source of income.