Working Paper: NBER ID: w29972
Authors: David Autor; David Cho; Leland D. Crane; Mita Goldar; Byron Lutz; Joshua K. Montes; William B. Peterman; David D. Ratner; Daniel Villar Vallenas; Ahu Yildirmaz
Abstract: The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress during the COVID-19 pandemic, aimed to assist small businesses to maintain employment and wages during the crisis. We use high-frequency administrative payroll data from ADP--one of the world’s largest payroll processing firms--to estimate the causal effect of the PPP on the evolution of employment at PPP-eligible firms relative to PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. We estimate that the PPP boosted employment at eligible firms by between 2 percent to 5 percent at its peak in mid-2020, with this effect waning to 0 to 3 percent throughout the remainder of the year. Employers retained an estimated additional 3.6 million jobs due to the PPP as of mid-May 2020, and 1.4 million jobs at the end of 2020. The implied cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings.
Keywords: Paycheck Protection Program; employment; COVID-19; small businesses; fiscal stimulus
JEL Codes: E24; H25; H32; H81; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Paycheck Protection Program (PPP) (H81) | employment at eligible firms (L26) |
| Paycheck Protection Program (PPP) (H81) | retained jobs (J63) |
| Paycheck Protection Program (PPP) (H81) | employment increase relative to ineligible firms (J68) |
| Paycheck Protection Program (PPP) (H81) | employment effect waning over time (J29) |
| PPP take-up rate (H43) | employment at eligible firms (L26) |
| PPP funding (H81) | firms retaining employment (M51) |