Earnings losses and the role of the welfare state during the COVID-19 pandemic: evidence from Sweden

Published: 27 October 2022

Author: Adrian Adermon, And Lisa Laun, And Patrik Lind, And Jan Sauermann, And Anna Sjögren, And Martin Olsson, And

Many governments introduced temporary adjustments to counter the economic and health consequences of the COVID-19 pandemic. We study the importance of already existing government transfers and pandemic measures to mitigate individual income losses during the pandemic in Sweden using a difference-in-differences approach and population-wide data on monthly earnings and government transfer payments. We find that labor earnings dropped by 2.7 percent in 2020. Existing transfers and pandemic measures reduced earnings losses to 1.5 percent. These average effects mask considerable differences in income losses, which were, by and large, evened out by existing transfers and pandemic measures.

Keywords: COVID-19, income inequality, government transfers, short-time work

JEL-codes: D31, E24, H20, H12, C23


Working paper 2022:20 is written by Adrian Adermon (IFAU, UCLS and UCFS), Lisa Laun (IFAU and UCLS), Patrik Lind (IFAU), Martin Olsson (IFN and IFAU), Jan Sauermann (IFAU, UCLS and IZA) and Anna Sjögren (IFAU and UCLS). For further information, please contact Lisa Laun at lisa.laun@ifau.uu.se , or Anna Sjögren  at anna.sjogren@ifau.uu.se.

The content of this working paper has previously been published as a Swedish report, no 2022:3.