David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua K. Montes, William B. Peterman, David D. Ratner, Daniel Villar Vallenas, and Ahu Yildirmaz
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. The authors 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. It is estimated 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.
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