Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland

50 Pages Posted: 6 Aug 2020

See all articles by Robert P. Bartlett

Robert P. Bartlett

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

Adair Morse

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

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Date Written: July 26, 2020

Abstract

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.

Keywords: Small business, COVID-19, pandemic, Payroll Protection Program (PPP), Pandemic Unemployment Insurance, entrepreneurship, main street, microbusiness, foot traffic, business survival, labor flexibility

JEL Classification: E61, E65, E32, H32, H84, L26, J65, G38

Suggested Citation

Bartlett, Robert P. and Morse, Adair, Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland (July 26, 2020). Available at SSRN: https://ssrn.com/abstract=3660991 or http://dx.doi.org/10.2139/ssrn.3660991

Robert P. Bartlett

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States
510-642-6646 (Phone)

University of California, Berkeley - Berkeley Center for Law, Business and the Economy

UC Berkeley School of Law
Berkeley, CA 94720

Adair Morse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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