The Short-Term Effect of the Paycheck Protection Program on Unemployment

20 Pages Posted: 9 Aug 2020

See all articles by Santiago Barraza

Santiago Barraza

Universidad de San Andrés

Martin Rossi

University of San Andres

Timothy J. Yeager

University of Arkansas - Sam M. Walton College of Business

Date Written: August 5, 2020

Abstract

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

Barraza, Santiago and Rossi, Martin and Yeager, Timothy J., The Short-Term Effect of the Paycheck Protection Program on Unemployment (August 5, 2020). Available at SSRN: https://ssrn.com/abstract=3667431 or http://dx.doi.org/10.2139/ssrn.3667431

Santiago Barraza (Contact Author)

Universidad de San Andrés ( email )

Vita Dumas 284
Victoria, Buenos Aires 1644
Argentina
+54 11 4725 7070 (Phone)

HOME PAGE: http://santiagobarraza.com

Martin Rossi

University of San Andres ( email )

Vita Dumas 284
(1644) Victoria, Pcia
Buenos Aires, Buenos Aires 1644
Argentina

Timothy J. Yeager

University of Arkansas - Sam M. Walton College of Business ( email )

Fayetteville, AR 72701
United States

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