Labor Market Effects of COVID-19 in Sweden and its Neighbors: Evidence from Novel Administrative Data

Abstract

This paper studies the labor market effects of non-pharmaceutical interventions (NPIs) to combat the COVID-19 pandemic. We focus on the Nordic countries which showed one of the highest variations in NPIs despite having similar community spread of COVID-19 at the onset of the pandemic: While Denmark, Finland and Norway imposed strict measures ('lockdowns'), Sweden decided for much lighter restrictions. Empirically, we 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. Our evidence suggests that the labor markets of all countries were severely hit by the pandemic, although Sweden performed slightly better than its neighbors. Specifically, we find the worsening of the Swedish labor market to occur around 2 to 3 weeks later than in the other Nordic countries, and that its cumulative sum of new unemployment and furlough spells remained significantly lower during the time period of our study (up to week 21 of 2020).

The lockdown effect: A counterfactual for Sweden

“…In addition, our analysis suggests that the economic costs of a lockdown in Sweden would have been moderate, consistent with the finding that the Swedish labor market performed only slightly better than that of its neighbors [28]. This, too, may be partly explained by voluntary social distancing because it has taken a sizeable toll on output growth in Sweden.…”

Job Search during the COVID-19 Crisis

“…See alsoBorn et al (2020).3 Juranek et al (2020) document the labour market response in terms of unemployment and furlough spells in the Nordic countries. They find large increases in Denmark exactly around the time of the lockdown in week 11, and for Sweden a similar but somewhat less strong increase around two to three weeks thereafter.4 The wage data (Strukturlonestatistiken) are downloaded from Statistics Sweden's web page (www.scb.se).…”

Kovi̇d-19 Küresel Salgininin İşgücü Pi̇yasalari Üzeri̇ndeki̇ Etki̇leri̇ni̇n Anali̇zi̇: Kurumsal Veri̇ler Işiğinda Türki̇ye Örneği̇

“…al. (2020), Juranek et al (2020), Costa et al (2020), Forsythe et al (2020), Huang et al (2020), Cheng et al (2020), Montenovo et al (2020), Crayne (2020), Campello, Kankanhalli, and Muthukrishnan (2020), Lemieux et al (2020), Rojas et al (2020), Jain et al (2020), Stevenson (2020), Kapoor (2020), Bernstein, Richter, and Throckmorton (2020), Coibion, Gorodnichenko, and Weber (2020), Brodeur et al (2020), Jackson and Ortego-Marti (2020) conducted researches in parallel to this study and in the aftermath of Covid-19 outbreak. These studies are given as examples and this paper initiates to understand the pandemic effects upon labor markets by examining Turkish labor force and its labor market composition.…”