Were small businesses more likely to permanently close in the pandemic?

Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closure rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl–Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.Plain English SummarySmall businesses were more likely to close permanently during the early stages of the COVID-19 pandemic than large businesses. Although they rebounded strongly thereafter, market concentration remains higher than before the pandemic. We obtain these results from analyzing administrative firm-level data covering all businesses filing sales taxes in California. Our analysis contributes to research by demonstrating the fragility of small businesses during a crisis relative to large businesses. Our findings imply that small businesses may need additional support given the trend toward purchases from large online retailers.

Diminishing Marginal Returns to Computer‐Assisted Learning

The previous expansion of EdTech as a substitute for traditional learning around the world, the recent full‐scale substitution due to COVID‐19, and potential future shifts to blended approaches suggest that it is imperative to understand input substitutability between in‐person and online learning. We explore input substitutability in education by employing a novel randomized controlled trial that varies dosage of computer‐assisted learning (CAL) as a substitute for traditional learning through homework. Moving from zero to a low level of CAL, we find positive substitutability of CAL for traditional learning. Moving from a lower to a higher level of CAL, substitutability changes and is either neutral or even negative. The estimates suggest that a blended approach of CAL and traditional learning is optimal. The findings have direct implications for the rapidly expanding use of educational technology worldwide prior to, during, and after the pandemic.

Were small businesses more likely to permanently close in the pandemic?

Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closure rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl–Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.

The evolving impacts of the COVID‐19 pandemic on gender inequality in the US labor market: The COVID motherhood penalty

We explore whether COVID‐19 disproportionately affected women in the labor market using Current Population Survey data through the end of 2020. We find that male–female gaps in the employment‐to‐population ratio and hours worked for women with school‐age children have widened but not for those with younger children. Triple‐difference estimates are consistent with most of the reductions observed for women with school‐age children being attributable to additional childcare responsibilities (the “COVID motherhood penalty”). Conducting decompositions, we find women had a greater likelihood to telework, higher education levels and a less‐impacted occupational distribution, which all contributed to lessening negative impacts relative to men. [ FROM AUTHOR] Copyright of Economic Inquiry is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full . (Copyright applies to all s.)

Sales Losses in the First Quarter of the COVID-19 Pandemic: Evidence from California Administrative Data

COVID-19 led to a massive shutdown of businesses in the second quarter of 2020. Estimates from the CPS, for example, indicate that the number of active business owners dropped by 22 percent from February to April 2020. In this descriptive research note, we provide the first analysis of losses in sales and revenues among the universe of businesses in California using administrative data from the California Department of Tax and Fee Administration. The losses in sales average 17 percent in the second quarter of 2020 relative to the second quarter of 2019 even though year-over-year sales typically grow by 3-4 percent. We find that sales losses were largest in businesses affected by mandatory lockdowns such as Accommodations, which lost 91 percent, whereas online sales grew by 180 percent. Losses also differed substantially across counties with large losses in San Francisco (50 percent) and Los Angeles (24 percent) whereas some counties experienced small gains in sales. Placing business types into different categories based on whether they were essential or non-essential (and thus subject to early lockdowns) and whether they have a moderate or high level of person-to-person contact, we find interesting correlations between sales losses and COVID-19 cases per capita across counties in California. The results suggest that local implementation and enforcement of lockdown restrictions and voluntary behavioral responses as reactions to the perceived local COVID-19 spread both played a role, but enforcement of mandatory restrictions may have had a larger impact on sales losses.

Isolating the “Tech” from EdTech: Experimental Evidence on Computer Assisted Learning in China

EdTech which includes online education, computer assisted learning (CAL), and remote instruction was expanding rapidly even before the current full-scale substitution for in-person learning at all levels of education around the world because of the coronavirus pandemic. Studies of CAL interventions have consistently found large positive effects, bolstering arguments for the widespread use of EdTech. However CAL programs, often held after school, provide not only computer-based instruction, but often additional non-technology based inputs such as more time on learning and instructional support by facilitators. In this paper, we develop a theoretical model to carefully explore the possible channels by which CAL programs might affect academic outcomes among schoolchildren. We isolate and test the technology-based effects of CAL and additional parameters from the theoretical model, by designing a novel multi-treatment field experiment with more than four thousand schoolchildren in rural China. Although we find evidence of positive overall CAL program effects on academic outcomes, when we isolate the technology-based effect of CAL (over and above traditional pencil-and-paper learning) we generally find small to null effects. Our empirical results suggest that, at times, the “Tech” in EdTech may have relatively small effects on academic outcomes, which has important implications for the continued, rapid expansion of technologies such as CAL throughout the world.

The Impacts of COVID-19 on Minority Unemployment: First Evidence from April 2020 CPS Microdata

COVID-19 abruptly impacted the labor market with the unemployment rate jumping to 14.7 percent less than two months after state governments began adopting social distancing measures. Unemployment of this magnitude has not been seen since the Great Depression. This paper provides the first study of how the pandemic impacted minority unemployment using CPS microdata through April 2020. African-Americans experienced an increase in unemployment to 16.6 percent, less than anticipated based on previous recessions. In contrast, Latinx, with an unemployment rate of 18.2 percent, were disproportionately hard hit by COVID-19. Adjusting for concerns of the BLS regarding misclassification of unemployment, we create an upper-bound measure of the national unemployment rate of 26.5 percent, which is higher than the peak observed in the Great Depression. The April 2020 upper-bound unemployment rates are an alarming 31.8 percent for blacks and 31.4 percent for Latinx. Difference-in-difference estimates suggest that blacks were, at most, only slightly disproportionately impacted by COVID-19. Non-linear decomposition estimates indicate that a slightly favorable industry distribution partly protected them from being hit harder by COVID-19. The most impacted group are Latinx. Difference-in-difference estimates unequivocally indicate that Latinx were disproportionately impacted by COVID-19. An unfavorable occupational distribution and lower skills contributed to why Latinx experienced much higher unemployment rates than whites. These findings of early impacts of COVID-19 on unemployment raise important concerns about long-term economic effects for minorities.

The Impact of COVID-19 on Small Business Owners: The First Three Months after Social-Distancing Restrictions

Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 are expected to shutter many small businesses and entrepreneurial ventures, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 CPS – the first month fully capturing early effects. The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries. African-American businesses were hit especially hard experiencing a 41 percent drop in business activity. Latinx business owner activity fell by 32 percent, and Asian business owner activity dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of business activity losses. Immigrant business owners experienced substantial losses in business activity of 36 percent. Female business owners were also disproportionately affected (25 percent drop in business activity). Continuing the analysis in May and June, the number of active business owners remained low – down by 15 percent and 8 percent, respectively. The continued losses in May and June, and partial rebounds from April were felt across all demographic groups and most industries. These findings of early-stage losses to small business activity have important implications for policy, income losses, and future economic inequality.

The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey

Social distancing restrictions and demand shifts from COVID-19 are expected to shutter many small businesses, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 CPS – the first month fully capturing early effects from the pandemic. The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses. African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of losses. Immigrant business owners experienced substantial losses of 36 percent. Female-owned businesses were also disproportionately hit by 25 percent. These findings of early-stage losses to small businesses have important policy implications and may portend longer-term ramifications for job losses and economic inequality.

The Impact of COVID-19 on Community College Enrollment and Student Success: Evidence from California Administrative Data

Enrollment increased slightly at both the California State University and University of California systems in fall 2020, but the effects of the pandemic on enrollment in the California Community College system are mostly unknown and might differ substantially from the effects on 4-year colleges. This paper provides the first analysis of how the pandemic impacted enrollment patterns and the academic outcomes of community college students using administrative college-level panel data covering the universe of students in the 116-college California Community College system. We find that community college enrolment dropped precipitously in fall 2020 – the total number of enrolled students fell by 4 percent in spring 2020 and by 15 percent in fall 2020 relative to the prior year. All racial and ethnic groups experienced large enrollment decreases in spring and fall 2020, but African-American and Latinx students experienced the largest drops at 17 percent in fall 2020. Enrollment fell the most for first-year students in the community college system, basic skills courses, and fields such as engineering/industrial technology, education, interdisciplinary studies, and art. There were smaller decreases for continuing students, academic courses transferable to four-year institutions, and business and science fields. Enrollment losses were felt throughout the entire community college system, and there is no evidence that having a large online presence in prior years protected colleges from these effects. In terms of course performance, there was a larger disruption to completion rates, withdrawal rates, and grades in spring 2020 than in fall 2020. These early findings of the effects of the pandemic at community colleges, which serve higher percentages of lower-income and minority students, have implications for policy, impending budgetary pressures, and future research. Please note: Data from fall 2020 might overstate enrollment losses due to misinterpretation of data that coincides with variation in college/district submission and verification as a result of the COVID-19 pandemic. The California Community College Chancellor’s Office is reviewing the processes in consultation with college and district stakeholders to produce complete, accurate, and verified revised data.

Does EdTech Substitute for Traditional Learning? Experimental Estimates of the Educational Production Function

Experimental studies rarely consider the shape and nature of the education production function, which is useful for deriving optimal levels of input substitution in increasingly resource constrained environments. Because of the rapid expansion of EdTech as a substitute for traditional learning around the world and against the backdrop of full-scale temporary substitution due to the coronavirus pandemic, we explore the educational production function by using a large randomized controlled trial that varies dosage of computer-assisted learning (CAL) as a substitute for traditional learning. Results show production is concave in CAL. Moving from zero to a low level of CAL, the marginal rate of technical substitution (MRTS) of CAL for traditional learning is greater than one. Moving from a lower to a higher level of CAL, production remains on the same or a lower isoquant and the MRTS is equal to or less than one. The estimates are consistent with the general form of a Cobb-Douglas production function and imply that a blended approach of CAL and traditional learning is optimal. The findings have direct implications for the rapidly expanding use of educational technology worldwide and its continued substitution for traditional learning.

Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of COVID-19?

Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 shut down many small businesses with especially negative impacts on minority owners. Is there evidence that the unprecedented federal government response to help small businesses – the $659 billion Paycheck Protection Program (PPP) and the related $220 billion COVID-19 Economic Injury Disaster Loans (EIDL) – which had a stated goal of helping disadvantaged groups, was disbursed evenly to minority communities? In this descriptive research note, we provide the first detailed analysis of how the PPP and EIDL funds were disbursed across minority communities in the country. From our analysis of data on the universe of loans from these programs and administrative data on employer firms, we generally find a slightly positive relationship between PPP loan receipt per business and the minority share of the population or businesses, although funds flowed to minority communities later than to communities with lower minority shares. PPP loan amounts, however, are negatively related to the minority share of the population. The EIDL program, in contrast, both in numbers and amounts, was distributed positively to minority communities.

Did the Paycheck Protection Program and Economic Injury Disaster Loan Program get disbursed to minority communities in the early stages of COVID-19?

Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 shut down many small businesses with especially negative impacts on minority owners. Is there evidence that the unprecedented federal government response to help small businesses—the Paycheck Protection Program (PPP) and the related COVID-19 Economic Injury Disaster Loans (EIDL)—which had a stated goal of helping disadvantaged groups, was disbursed evenly to minority communities? In this descriptive research note, we provide the first detailed analysis of how the 2020 PPP and EIDL funds were disbursed across minority communities in the country. From our analysis of data on the universe of loans from these programs and administrative data on employer firms, we generally find a slightly positive relationship between PPP loan receipt per business and the minority share of the population or businesses, although funds flowed to minority communities later than to communities with lower minority shares. PPP loan amounts per employee, however, are negatively related to the minority share of the population. The EIDL program, in contrast, both in numbers per business and amounts per employee, was distributed positively to minority communities.

Instructional interventions for improving COVID-19 knowledge, attitudes, behaviors: Evidence from a large-scale RCT in India.

Seeking ways to encourage broad compliance with health guidelines during the pandemic, especially among youth, we test two hypotheses pertaining to the optimal design of instructional interventions for improving COVID-19-related knowledge, attitudes, and behaviors. We randomly assigned 8376 lower-middle income youth in urban India to three treatments: a concentrated and targeted fact-based, instructional intervention; a longer instructional intervention that provided the same facts along with underlying scientific concepts; and a control. Relative to existing efforts, we find that both instructional interventions increased COVID-19-related knowledge immediately after intervention. Relative to the shorter fact-based intervention, the longer intervention resulted in sustained improvements in knowledge, attitudes, and self-reported behavior. Instead of reducing attention and comprehension by youth, the longer scientific based treatment appears to have increased understanding and retention of the material. The findings are instrumental to understanding the design of instruction and communication in affecting compliance during this and future pandemics.

The impact of COVID-19 on small business owners: Evidence from the first three months after widespread social-distancing restrictions.

Social-distancing restrictions and health- and economic-driven demand shifts from COVID-19 are expected to shutter many small businesses and entrepreneurial ventures, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 Current Population Survey-the first month fully capturing early effects. The number of active business owners in the United States plummeted by 3.3 million or 22% over the crucial 2-month window from February to April 2020. The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries. African-American businesses were hit especially hard experiencing a 41% drop in business activity. Latinx business owner activity fell by 32%, and Asian business owner activity dropped by 26%. Simulations indicate that industry compositions partly placed these groups at a higher risk of business activity losses. Immigrant business owners experienced substantial losses in business activity of 36%. Female business owners were also disproportionately affected (25% drop in business activity). Continuing the analysis in May and June, the number of active business owners remained low-down by 15% and 8%, respectively. The continued losses in May and June, and partial rebounds from April were felt across all demographic groups and most industries. These findings of early-stage losses to small business activity have important implications for policy, income losses, and future economic inequality.

Early evidence of the impacts of COVID-19 on minority unemployment.

This paper provides early evidence of the impacts of the COVID-19 pandemic on minority unemployment in the United States. In the first month following March adoptions of social distancing measures by states, unemployment rose to 14.5% but a much higher 24.4% when we correct for potential data misclassification noted by the BLS. Using the official definition, unemployment in April 2020 among African-Americans rose by less than what would have been anticipated (to 16.6%) based on previous recessions, and the long-term ordering of unemployment across racial/ethnic groups was altered with Latinx unemployment (18.2%) rising for the first time to the highest among major groups. Difference-in-difference estimates confirm that the initial gap in unemployment between whites and blacks in April was not different than in periods prior to the pandemic; however, the racial gap expanded as unemployment for whites declined in the next two months but was largely stagnant for blacks. The initially large gap in unemployment between whites and Latinx in April was sustained in May and June as unemployment declined similarly for both groups. Non-linear decompositions show a favorable industry distribution partly protected black employment during the early stages of the pandemic, but that an unfavorable occupational distribution and lower average skills levels placed them at higher risk of job losses. An unfavorable occupational distribution and lower skills contributed to a sharply widened Latinx-white unemployment gap that moderated over time as rehiring occurred. These findings of disproportionate impacts on minority unemployment raise important concerns regarding lost earnings and wealth, and longer-term consequences of the pandemic on racial inequality in the United States.

Schooling and Covid-19: lessons from recent research on EdTech.

The wide-scale global movement of school education to remote instruction due to Covid-19 is unprecedented. The use of educational technology (EdTech) offers an alternative to in-person learning and reinforces social distancing, but there is limited evidence on whether and how EdTech affects academic outcomes. Recently, we conducted two large-scale randomized experiments, involving ~10,000 primary school students in China and Russia, to evaluate the effectiveness of EdTech as a substitute for traditional schooling. In China, we examined whether EdTech improves academic outcomes relative to paper-and-pencil workbook exercises of identical content. We found that EdTech was a perfect substitute for traditional learning. In Russia, we further explored how much EdTech can substitute for traditional learning. We found that EdTech substitutes only to a limited extent. The findings from these large-scale trials indicate that we need to be careful about using EdTech as a full-scale substitute for the traditional instruction received by schoolchildren.