Poverty and Inequality During the COVID-19 Crisis: Evidence from Administrative Data in Switzerland

This paper investigates the effects of the COVID-19 pandemic on income inequality and poverty prevalence. Using comprehensive tax data linked to household registry data, we assess the financial situation of households across different pre-pandemic income levels. Our findings reveal that, during the pandemic, annual net household income increased on average for those in the lower part of the income distribution, while it declined for households in the upper income brackets. Additionally, we observe that household savings, as indicated by changes in liquid asset holdings, rose across all income levels, suggesting a reduction in consumer spending due to COVID-19 containment measures. However, within each income decile, a significant portion of households experienced declines in both net income and savings, highlighting the potential harmfulness of a pandemic-induced economic crisis. All in all, we demonstrate the importance state interventions to stabilize income during the pandemic to reduce poverty prevalence in Switzerland.