DP16333 COVID-19 and Income Inequality: Evidence from Monthly Population Registers

Author(s): Nikolay Angelov, Daniel Waldenström
Publication Date: July 2021
Keyword(s): Earnings, Government Policy, Income inequality, Pandemic
JEL(s): D31, H12, H24, J22
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16333

We measure the distributional impact of the COVID-19 pandemic using newly released population register data in Sweden. Monthly earnings inequality increased during the pandemic, and the key driver is income losses among low-paid individuals while middle- and high-income earners were almost unaffected. The pandemic had a larger negative impact on private-sector workers and on women. Using data on individual take-up of government COVID-19 support, we show that policy significantly dampened the inequality increase, but did not fully offset it. Annual total market income inequality, which also includes capital income and taxable transfers, shows similar patterns of increasing inequality during the pandemic.