The Short-Term Effect of the Paycheck Protection Program on Unemployment
20 Pages Posted: 9 Aug 2020
Date Written: August 5, 2020
We study the short-term causal effect of the Paycheck Protection Program on unemployment. Using the 2019 density of Small Business Administration member bank offices in a county as an instrument for PPP loans originated in that county during April 2020, we find statistically and economically significant effects from the program on unemployment. Our results highlight the importance of this relief policy and the financial system infrastructure in preserving jobs during the COVID-19 crisis.
Keywords: Paycheck Protection Program, Banks, Financial system, COVID-19, Labor Market
JEL Classification: G18, G21
Suggested Citation: Suggested Citation