The $800 billion paycheck protection program: where did the money go and why did it go there?

Peer-reviewed Publication

David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua Montes, William B. Peterman, David Ratner, Daniel Villar, and Ahu Yildirmaz

May 2022

This paper explores who ultimately benefited from those $800 billion in Paycheck Protection Program loans: concretely, where did the money go and why did it go there? The paper provides an answer in three steps. First, the researchers consider how PPP funds flowed to three proximate sets of actors: workers who otherwise would have been laid off; creditors and suppliers of PPP-receiving businesses (for example, landlords, and utilities) who would otherwise not have received payments; and windfall transfers to PPP-recipient businesses (owners and shareholders) that would have maintained employment and met other financial obligations absent the PPP. Second, the research calculates how these recipients were distributed across the household income distribution. Finally, the authors compare this allocation of funds to the household incidence of the two other major federal pandemic transfer programs: unemployment assistance and direct household payments. The analysis combines lessons from existing research, including some of our own, and also presents new analysis using anonymized and aggregated payroll data from the private firm ADP, which processes payrolls for over 26 million individual workers in the United States per month.