Pandemic inequalities: Regional and risk-group differences in Switzerland

This paper examines the evolution of labor income inequality in Switzerland during the pandemic using comprehensive administrative data from the Old-Age and Survivors' Insurance (OASI) system, which cover nearly the entire employee population between 2016 and 2022. Our main empirical analysis relies on a balanced panel of more than 2.6 million prime-age Workers with stable pre-pandemic labor market attachment. Focusing on labor earnings from dependent employment, we estimate group-specific pre-pandemic income trends and quantify pandemic related income losses for 2020–2022 as deviations from these trajectories. Our results show that labor incomes declined relative to their expected trend in all Swiss regions, indicating a broad negative income shock despite extensive policy support. Income losses were disproportionately concentrated among workers in the lower part of the income distribution, pointing to a widening of earnings inequality beyond pre-pandemic trends. Moreover, while income deviations among high income workers were relatively homogeneous across regions, losses among low-income workers varied substantially and were descriptively associated with differences in cantonal Containment policies. Heterogeneity analyses further reveal stronger income disruptions among workers in contact-intensive occupations, women, younger individuals, and migrants. Overall, the findings suggest that the pandemic acted as a magnifier of existing labor market inequalities.