The Economic Effects of COVID-19 in Sweden: A Report on Income, Taxes, Distribution, and Government Support Policies

Nikolay Angelov () and Daniel Waldenström ()
Additional contact information
Nikolay Angelov: Uppsala Center for Fiscal Studies
Daniel Waldenström: Research Institute of Industrial Economics, Stockholm

No 200, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: This report analyses the economic consequences of the coronavirus pandemic and support policies using underutilized data sources from the Swedish Tax Agency's tax register, which provides real-time information on firm sales and employees' wage income. Firms' sales, particularly in areas heavily impacted by COVID-19, declined by 6.1% on average, inducing a drastic economic recession. Excise tax revenue analysis reveals a decline in industrial electricity and air travel tax revenues, but a rise in alcohol tax revenue. The hospitality industry experienced significant negative effects, with drops in sales, employment, and wage income. Payroll tax revenues decreased due to government intervention, whereas sick pay drastically increased. Average pre-tax labor income decreased by 5%, largely due to increased unemployment among part-time workers, escalating income inequality. Policy simulations indicate government support measures mitigated wage income reduction and unemployment rise, yet they contributed to income inequality under certain conditions. These results provide insight into the diverse, yet significant, economic impacts of the pandemic. A number of policy recommendations are presented based on the empirical findings.

Keywords: COVID-19; taxes; inequality; policy effects (search for similar items in EconPapers)
JEL-codes: D31 H12 H24 J22 J24 (search for similar items in EconPapers)
Pages: 151 pages
Date: 2023-07
New Economics Papers: this item is included in nep-cmp, nep-lma and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/pp200.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izapps:pp200

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Policy Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().