DP17448 Sweden’s COVID-19 Recession: How Foreign and Domestic Infections Struck against Firms and Workers

• Anders Akerman Karolina Ekholm Torsten Persson Oskar Nordström Skans
8 Jul 2022

Using highly granular micro data, we document very divergent economic effects of the
COVID-19 pandemic on Swedish private-sector firms and their workers. Firms that exported
to, or imported from, heavily afflicted countries reduced their output due to disrupted
trade. Service firms that operated in locations with many infections reduced their output
due to falling local consumption, despite very limited regional restrictions. Workers at the
bottom of each social gradient – defined by education, earnings or ethnicity – took a
twofold hit: their employers faced the largest output drops and they experienced the largest
transmissions from firm output to earnings.