David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua Montes, William B. Peterman, David Ratner, Daniel Villar, and Ahu Yildirmaz
The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress in response to the COVID-19 economic shock, is intended to assist small businesses to maintain employment and wages during the crisis. An obstacle to assessing whether the PPP achieved this goal is the absence of granular, high-frequency employment data that can precisely capture any causal effect of the PPP on employment. We use administrative data from ADP—one of the world’s largest payroll processing firms—to contrast the evolution of payroll employment at PPP-eligible and PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. We estimate that the PPP boosted employment at eligible firms by 2 to 4.5 percent, with a preferred central tendency estimate of approximately 3.25 percent. Our estimates imply that the PPP increased aggregate U.S. employment by 1.4 million to 3.2 million jobs through the first week of June 2020, with a preferred central tendency estimate of about 2.3 million workers. In an alternative analysis, we identify the effect of the PPP from a set of firms for which we can observe loan take-up and obtain results at the upper end of the range of estimates. Although the evidence is supportive of a causal effect of the PPP on aggregate employment, we are careful to highlight puzzles where they occur and view our work as preliminary in nature. Future work will leverage loan-level PPP data to calibrate the relationship between eligibility, take-up, and employment.
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