Earnings losses and the role of the welfare state during the COVID-19 pandemic: evidence from Sweden
Published: 27 October 2022
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 email@example.com , or Anna Sjögren at firstname.lastname@example.org.
The content of this working paper has previously been published as a Swedish report, no 2022:3.