Poverty in Times of Crisis: Evidence from the Covid-19 Pandemic using Administrative Data in Switzerland

Although the Covid-19 pandemic is primarily a health crisis, it also affected the economy and living conditions in many ways. According to epidemiologists, other global pandemics are very likely to occur in the near future, which reinforces the need to understand what works and what does not in times of pandemic-induced economic downturn.
Based on what is known, the economic impact of pandemics has been uneven across the population. While some groups were little affected or even benefited from the new conditions, others suffered income losses. For example, Almeida et al. (2021), using the European Commission's macroeconomic forecasts, conclude that the at-risk-of-poverty rate, anchored at its 2020 value (i.e. the poverty threshold is held constant in real terms), is likely to have increased from 16.0% to 18.4% at EU level in 2020. However, it is not clear whether poverty has increased in general, as highlighted by the study by Bruckmeier et al. (2021) for Germany. They also find that the highest net household income losses are experienced by the lowest income deciles. But considering the discretionary non-employment benefits introduced by the German government at the onset of the crisis (additional family benefits and tax rebates), the authors actually find a slight increase in net income for households at the bottom of the income distribution. Furthermore, Brewer & Gardiner (2020) show for the United Kingdom that the bottom quintile is not the most affected in terms of household income, but that the share of respondents reporting a decrease in household income was highest in the second and third to bottom quintiles, suggesting that the pandemic may have led to poverty experiences for social groups that were previously above the poverty line.
Initial studies in Switzerland have focused mainly on the situation during the first episode of partial lockdown, but there is a lack of comprehensive and systematic studies on the longer dynamics of the pandemic. This is mainly due to the delayed availability of robust data. Analyses based on registries or administrative data are still very rare. As a result, it is not entirely clear how the Corona pandemic affected inequality and poverty in Switzerland and how effectively the social safety net protected the population. Second, most studies to date report on distributional effects, but hardly any provide poverty estimates.
In this context, the main objective of this paper is to generate knowledge about the economic impact of the Corona pandemic on society, with a focus on poverty, in order to (a) better understand how the most vulnerable in society are affected in a crisis and (b) gain insights into how to improve social security and crisis management for socially disadvantaged groups.
The main research question can be formulated as follows: How did the Covid-19 pandemic affect poverty and low-income groups in Switzerland, and how well were those affected by the crisis covered by social security?