Poverty and social security in time of crisis – lessons (to be) learned during the Covid-19 pandemic (NRP 80: Covid-19 in Society, SNFS-project 210054).
As part of its pandemic control efforts, Switzerland imposed restrictions on private and economic life. This project investigates the impact on the financial situation and poverty levels of the country’s population.
Background and Motivation
The measures taken in spring 2020 with lockdowns are of particular importance for economic life in Switzerland. Instruments such as short-time work were introduced. The associated economic consequences for the population varied greatly depending on the socio-economic group. Which groups were most affected depends strongly on the economic set-up and the measures taken to stop the spread and dampen the consequences through social benefits. Conclusive studies are missing, and it is not known how inequality and poverty rates developed during the pandemic. Therefore, the role of the regular instruments of the social security system and the effectiveness of the pandemic-specific measures needs to be clarified. In addition, it is essential to systematically reflect on the role of non-governmental organisations in social security during the Covid-19 pandemic and in future crises.
Using linked tax data for 4.5 million people, the research group will investigate changes in income and wealth between 2019 and 2022, focusing on the situation of people with few financial resources. By linking these data with data on social security benefits, it will also be possible to show how effectively the social security system protects the people affected. A further part of the project will use case data from Caritas Switzerland, the country’s biggest NGO, which supported more than 100,000 people during the pandemic. This social security safety net comes into play particularly when there are gaps in state cover. This basis will be used to develop a poverty monitoring early warning system for future crises.
The aim of the project is to answer the following research questions:
- What impact did the Covid-19-pandemic have on economic inequality and poverty in Switzerland?
- What were the short-term, mid- and potential long-term effects of the Covid-19 pandemic?
- How well were low-income groups protected by the social security system in the federal system of Switzerland? Are differences in enforcement of corona aid by the various cantons relevant?
- Which social groups were most affected? Who was covered by social security and who was not?
- What is the role of NGOs in providing social security for the poor in a rich country in general and in a crisis?
- How must a lean data collection procedure be established documenting supported clients of Caritas and their profiles?
- How can this information be used to build timely poverty indicators and early detection of problem situations in a further crisis?
The findings will provide the basis of a policy brief on managing any future crisis in a more socially compatible way. The early warning system that will be developed will also give Switzerland an opportunity to acquire poverty indicators that deliver information promptly.
Inequality, poverty risks and the welfare state. Potentials of Data Linking of Administrative and Survey Data for Inequality Research (SNFS-project 178973)
This ongoing research project relies on linking cantonal tax data with other administrative and survey data. In this way we create a new basis for the study of economic inequality in Switzerland, which addresses the shortcomings of previous approaches and opens new possibilities to study old and new research questions.
Motivation of the project
For a valid investigation of economic inequality in a society, comprehensive data of high quality are necessary. In this context, the increasing availability and use of administrative data for research purposes has been an interesting development in recent years. However, the data generated by administrative processes cannot be easily used for research. For this purpose, various legal and technical questions have to be clarified and great care has to be taken with regard to the clarification of conceptual requirements for the data. Tax data offer great potential for inequality research. On the basis of tax data, for example, a branch of inequality research with a focus on top incomes has established itself. However, the potential has so far not been sufficiently exploited for studies of inequality and poverty in society as a whole. Within the framework of the project described here, we want to link selected cantonal tax data of Switzerland with further administrative and survey data in order to create a database that exploits this potential and opens up new possibilities for answering questions in the field of inequality and poverty research. The database is to comprise eight cantons (with at least one representative per Greater Region of Switzerland) and cover a period from 2010 to 2015. This will make it possible to examine how the increase in inequality between and within cantons observed in the previous project can be classified and how it has developed. An in-depth analysis of these descriptive analyses includes the analysis of inequality according to socio-demographic characteristics such as household types, migration background and social origin in order to arrive at a comprehensive description of inequality and poverty structures. The third step is devoted to the analysis of the redistributive effects of the tax system and various welfare state instruments. Fiscal instruments of redistribution are the most direct way to address social inequalities. In Switzerland, these are characterised by considerable cantonal variation, which opens up interesting possibilities for comparison, especially with regard to the influence of social policy on inequality. There is a clear need for research in this area.
The following research questions are in focus:
- How unequally are economic resources distributed in Switzerland?
- How pronounced is the level of poverty and the risk of poverty?
- Does the new database show new findings in comparison with existing research?
- What insights into inequality and poverty can be gained from the joint analysis of income and wealth distribution?
- How does inequality and poverty relate to key socio-demographic categories such as social origin, occupation, education and household situation?
- How effective is the redistribution of various welfare state instruments to reduce inequality and poverty?
Inequality in Income and Wealth in Switzerland from 1970 to 2010 (SNFS-project 143399)
The research project of the University of Bern and the Berne University of Applied Sciences traced the development of inequality in detail and on a reliable and uniform data basis and by relating it to explanatory factors. In particular, the project aimed to answer the following questions:
- How has the distribution of income and wealth of natural persons in Switzerland changed overall in recent decades?
- What cantonal differences are there in the development of income and wealth inequalities and how can these be explained?¨
- How has the composition of income and the distribution of individual income types (wages, capital income, rental income) changed in recent decades and what effect does this change have on income inequality?
- How can the development of income and wealth inequalities be explained in the individual decades? In other words, what are the correlations with socio-demographic change (e.g. age structure, changes in household types, employment behaviour), economic change (e.g. unemployment, economic activity, changes in economic structure, international trade) and the structure of the welfare state (e.g. taxation, social insurance, benefits, size of the state sector, trade unions)?
- What are the differences between the various subpopulations of Swiss society?
In order to answer these research questions, reliable and detailed data on the income and wealth of individuals and households over longer periods of time are needed, which can also be related to explanatory factors and other contextual characteristics. In this project we collected individual tax data for a selection of cantons. In a first phase, existing electronic data were procured and processed that has been available in the selected cantons since the mid-1990s at the latest. In a second phase, In particular for the purpose of cross-validation, the federal tax data of the FTA, which have been available since 1973/4 aggregated by income class and separated by household type, were processed and evaluated. By providing a new database for a period of about 40 years and by analysing the development of inequality in Switzerland and its dynamics as a result of cyclical factors, the changed economic structure, welfare-state institutional and other social changes, the project contributed to an understanding of these complex influencing mechanisms and closes important gaps in knowledge in the field of inequality research in Switzerland.