Labor Market Effects of COVID-19 in Sweden and its Neighbors: Evidence from Novel Administrative Data
By Steffen Juranek, Jörg Paetzold, Hannes Winner and Floris T. Zoutman is forthcoming in Kyklos.
The authors study the labor market effects of lockdown measures to combat the COVID-19 pandemic. They focus on the Nordic countries Denmark, Finland, Norway and Sweden. The Nordic countries are an ideal laboratory for studying the labor market effects of lockdown measures. During the early phase of the pandemic, the spread of COVID-19 was very similar in the four countries. Nevertheless, Denmark, Finland and Norway imposed strict measures (`lockdowns'), whereas Sweden decided for much lighter restrictions. This allows the authors to isolate the causal impact of the lockdown on labor market outcomes, from the direct impact of the pandemic.
The authors use novel administrative data on weekly new unemployment and furlough spells from all 56 regions of the Nordic countries to compare the labor market outcomes of Sweden with the ones of its neighbors. Prior to the start of the pandemic the labor market conditions in the four countries where quite similar.
Our evidence suggests that the labor markets of all countries were severely hit by the pandemic. Nevertheless, Sweden performed slightly better than its neighbors did. The deterioration of the Swedish labor market occured around 2 to 3 weeks later than in the other Nordic countries. In addition, the cumulative sum of new unemployment and furlough spells remained significantly lower during the time period of our study (up to week 21 of 2020).
Juranek, Steffen, Jörg Paetzold, Hannes Winner, and Floris T. Zoutman. Labor market effects of COVID-19 in Sweden and its neighbors: Evidence from novel administrative data. Kyklos (forthcoming).