Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1397: The Impact of COVID-19 on Economic Activity: Evidence from Administrative Tax Registers

Nikolay Angelov () and Daniel Waldenström ()
Additional contact information
Nikolay Angelov: The Swedish Tax Agency and Uppsala Center for Fiscal Studies (UCFS)
Daniel Waldenström: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: We use tax-register data on all firms in Sweden to document the impact of the Covid-19 pandemic on firm sales, tax payments, and sick pay. The pandemic impact is identified using within-year, between-year, and geographical variation, and we also run placebo tests. Our findings confirm large negative economic effects of the pandemic but shed new light on their magnitudes and sensitivity to Covid-19 morbidity rates. Specifically, we find that VAT and firm sales dropped more than other indicators of corporate activity such as industrial electricity usage or aggregate industrial production. Short-term sick pay increased during the pandemic, but, unlike tax payments, it was insensitive to local infection rates, which indicates behavioral responses to more generous sickness insurance rules during the pandemic.

Keywords: COVID-19 impact; VAT; Excise taxes; Sick pay

JEL-codes: H24; H25; J22; J24

Language: English

31 pages, First version: July 2, 2021. Revised: April 24, 2023.

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