The Impact of Covid-19 on Households' Income : Empirical Evidence from Sweden

Abstract: This thesis contributes to the emerging literature on the impacts of the Covid-19 pandemic on individuals’ labour market outcomes by investigating the effects on households’ income in the Swedish labour market. Using panel data for Sweden’s municipalities over the period 2011-2020, a difference-in-difference design is constructed to examine how the pandemic has affected average yearly disposable income for all households and how the effects are distributed across different household compositions and age groups. The findings suggest a decrease in income for all households of approximately 0.37%, mainly driven by households in the age group 30-49. Further, the distribution of impacts across the household types and age groups varies. Cohabiting without children experienced a decline in income of 0.37%, while no statistically significant values are discovered for women with- or without children, or men with- or without children. Looking at the age groups, significant negative values are found for cohabiting aged 18-29 without children and cohabiting aged 30-49 with children. Even though no statistically significant values for neither women nor men are found, the size of the coefficients indicates a slightly larger income decrease for men compared to women.