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Earnings Losses and the Role of the Welfare State during the COVID-19 Pandemic: Evidence from Sweden

Author

Listed:
  • Adermon, Adrian

    (IFAU)

  • Laun, Lisa

    (IFAU)

  • Lind, Patrik

    (IFAU)

  • Olsson, Martin

    (IFN - Research Institute of Industrial Economics)

  • Sauermann, Jan

    (IFAU)

  • Sjögren, Anna

    (IFAU)

Abstract

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.

Suggested Citation

  • Adermon, Adrian & Laun, Lisa & Lind, Patrik & Olsson, Martin & Sauermann, Jan & Sjögren, Anna, 2022. "Earnings Losses and the Role of the Welfare State during the COVID-19 Pandemic: Evidence from Sweden," IZA Discussion Papers 15662, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15662
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    Cited by:

    1. Buhmann, Mara & Pohlan, Laura & Duncan, Roth, 2023. "The Covid-19 Pandemic and Transitions out of Unemployment," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277678, Verein für Socialpolitik / German Economic Association.
    2. Nikolay Angelov & Daniel Waldenström, 2023. "The Economic Effects of Covid-19 in Sweden: A Report on Income, Taxes, Distribution, and Government Support Policies," CESifo Working Paper Series 10547, CESifo.

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    More about this item

    Keywords

    COVID-19; income inequality; government transfers; short-time work;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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