Earnings Losses and the Role of the Welfare State During the COVID‐19 Pandemic: Evidence from Sweden

Earnings Losses and the Role of the Welfare State During the COVID‐19 Pandemic: Evidence from Sweden

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 new pandemic measures to mitigate individual income losses during the onset of the pandemic in Sweden using...

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Bibliographic Details
Published in:The Review of income and wealth Vol. 70; no. 4; pp. 981 - 1010
Main Authors: Adermon, Adrian, Laun, Lisa, Lind, Patrik, Olsson, Martin, Sauermann, Jan, Sjögren, Anna
Format: Journal Article
Language:English
Published: Oxford Blackwell Publishing Ltd 01-12-2024
Subjects:
COVID-19
Earnings
Government
government transfers
Income inequality
Pandemics
short‐time work
Transfer payments
Welfare state
Sweden
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Summary: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 new pandemic measures to mitigate individual income losses during the onset of 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 new pandemic measures reduced earnings losses to 1.5 percent. These average effects mask considerable differences in earnings losses, which were, by and large, evened out by existing transfers and new pandemic measures.
Bibliography:We thank Adam Altmejd, Evelina Björkegren, Maria Hemström Hemmingsson, Lena Hensvik, Oskar Nordström Skans, and two anonymous reviewers for comments and feedback. This research was conducted within SWECOV—the Swedish Register‐Based Research Program on COVID‐19—hosted by Stockholm University and financed by Riksbankens Jubileumsfond. We gratefully acknowledge financial support from the Swedish Research Council (grant number 2022‐06315). Martin Olsson also gratefully acknowledges financial support from the Marianne and Marcus Wallenberg Foundation (2020‐0049).
Note
ISSN:0034-6586
1475-4991
DOI:10.1111/roiw.12670