NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland

Robert P. Bartlett III, Adair Morse

NBER Working Paper No. 27629
Issued in July 2020
NBER Program(s):Corporate Finance, Labor Studies, Monetary Economics, Productivity, Innovation, and Entrepreneurship

Using unique City of Oakland data during COVID-19, we document that small business survival capabilities vary by firm size as a function of revenue resiliency, labor flexibility, and committed costs. Nonemployer businesses rely on low cost structures to survive 73% declines in own-store foot traffic. Microbusinesses (1-to-5 employees) depend on 14% greater revenue resiliency. Enterprises (6-to-50 employees) have twice-as-much labor flexibility, but face 11%-to-22% higher residual closure risk from committed costs. Finally, inconsistent with the spirit of Chetty-Friedman-Hendren-Sterner (2020) and Granja-Makridis-Yannelis-Zwick (2020), PPP application success increased medium-run survival probability by 20.5%, but only for microbusinesses, arguing for size-targeting of policies.

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Document Object Identifier (DOI): 10.3386/w27629

 
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