Dimitris Papanikolaou, Lawrence D.W. Schmidt, 23 July 2020

COVID-19 has massively disrupted the supply side of the world economy, shutting down entire industries. This column analyses how these disruptions affected different types of firms and workers by looking at how effectively different sectors can shift to remote work. While the major policy interventions in the US have treated all types of business as equivalent, industries which are not able to do their work remotely have been hit much harder than business that can. This cross-sectional dispersion shows up across a variety of measures, including changes in employment, revenue projections, likelihood of default, current liquidity, and stock returns. Going forward, aid that targets disrupted sectors may be a more cost-effective means to alleviate the impacts of COVID-19.

Morten Bennedsen, Birthe Larsen, Ian Schmutte, Daniela Scur, 28 June 2020

Much of the economic turmoil caused by the COVID-19 pandemic is channelled through firms and their managers’ decisions. Responding to the pandemic, governments have closed non-essential workplaces and imposed social distancing measures while offering firms various forms of aid. Using firm-level survey data from Denmark, this column examines the impact of these measures on firms, and the uptake and effects of certain policy tools used in Denmark, which are similar to those used in many other countries. It shows that while most firms suffered pronounced revenue declines, targeted government policy helped many stay afloat, and created incentives for job retention.

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