Labor earnings of native and foreign workers during the COVID-19 pandemic in Switzerland

The COVID-19 pandemic triggered an unprecedented economic shock, raising concerns that the pandemic may reinforce existing labor market inequalities. Theories on social stratification suggest that such disruptions can amplify structural disadvantages faced by migrant groups. Using linked administrative data from social security and population registry records for 2016–2022, we construct a balanced panel of more than two million prime-age workers with stable prepandemic labor market attachment. We estimate difference-in-differences event-study models to examine how labor earnings of native and foreign workers evolved before and after the onset of the pandemic across the labor earnings distribution. In the lower part of the labor earnings distribution, the labor earnings gap between natives and non-EU/EFTA workers at the onset of the pandemic did not differ from pre-pandemic years. However, this gap widened thereafter, indicating that the pandemic exacerbated disadvantages for this group. Moreover, analyses using linked survey data suggest that differential sorting into occupations or sectors does not fully account for these results. Overall, our findings indicate that large economic shocks can reproduce or intensify existing labor market inequalities.