IDEP Conferences, 11th journées Louis-André Gérard-Varet

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What doesn't kill you makes you stronger? The impact of the 1918 spanish flu epidemic on economic performance in Sweden
Martin Karlsson, Therese Nilsson, Stefan Pichler

Last modified: 2012-05-10


We study the impact of the 1918 influenza pandemic on economic performance in Sweden. The
pandemic was one of the severest and deadliest pandemics in human history, but it has hitherto
received only scant attention in the economic literature - despite important implications for
modern-day pandemics. In this paper, we exploit seemingly exogenous variation in incidence
rates between Swedish regions to estimate the impact of the pandemic. Using difference in-
differences and high-quality administrative data from Sweden, we estimate the eects on
earnings, capital returns and poverty. We find that the pandemic led to a significant increase
in poverty rates. There is also relatively strong evidence that capital returns were negatively
affected by the pandemic. On the other hand, we find robust evidence that the influenza had
no discernible eect on earnings. This finding is surprising since it goes against most previous
empirical studies as well as theoretical predictions.

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