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• Working Paper | HBS Working Paper Series | 2020

  The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses

  Alexander Bartik, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton and Adi Sunderam

  The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm-level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding—instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.

  Keywords: Paycheck Protection Program; targeting; Impact; Entrepreneurship; Health Pandemics; Small Business; Financing and Loans; Outcome or Result; United States;

  Citation:

  Bartik, Alexander, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, and Adi Sunderam. "The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses." Harvard Business School Working Paper, No. 21-021, August 2020.  View Details

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• Working Paper | 2020

  Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19

  Edward L. Glaeser, Ginger Zhe Jin, Michael Luca and Benjamin T. Leyden

  During the COVID-19 pandemic, states issued and then rescinded stay-at-home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay-at-home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay-at-home orders initially had a limited impact, but that activity rose quickly after states’ reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID-19 cases followed reopening in some states.

  Keywords: COVID-19; lockdown; reopening; Impact;

  Citation:

  Glaeser, Edward L., Ginger Zhe Jin, Michael Luca, and Benjamin T. Leyden. "Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19." NBER Working Paper Series, No. 27650, August 2020.  View Details

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• Article | Proceedings of the National Academy of Sciences

  The Impact of COVID-19 on Small Business Outcomes and Expectations

  Alexander Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca and Christopher Stanton

  To explore the impact of COVID on small businesses, we conducted a survey of more than 5,800 small businesses between March 28 and April 4, 2020. Several themes emerged. First, mass layoffs and closures had already occurred—just a few weeks into the crisis. Second, the risk of closure was negatively associated with the expected length of the crisis. Moreover, businesses had widely varying beliefs about the likely duration of COVID-related disruptions. Third, many small businesses are financially fragile: the median business with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the program, such as bureaucratic hassles and difficulties establishing eligibility. Using experimental variation, we also assess take-up rates and business resilience effects for loans relative to grants-based programs.

  Keywords: COVID-19; stimulus; CARES Act; Health Pandemics; Small Business; Surveys;

  Citation:

  Bartik, Alexander, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "The Impact of COVID-19 on Small Business Outcomes and Expectations." Proceedings of the National Academy of Sciences 117, no. 30 (July 28, 2020).  View Details

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