The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

41 Pages Posted: 15 Sep 2020 Last revised: 12 Jul 2021

See all articles by Georgij Alekseev

Georgij Alekseev

New York University (NYU) - Leonard N. Stern School of Business

Safaa Amer

Facebook

Manasa Gopal

Georgia Institute of Technology - Scheller College of Business

Theresa Kuchler

New York University (NYU)

JW SCHNEIDER

Facebook

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Nils Wernerfelt

Facebook

Multiple version iconThere are 4 versions of this paper

Date Written: September 10, 2020

Abstract

We analyze a large-scale survey of small business owners, managers, and employees in the United States to understand the effects of the COVID-19 pandemic on those businesses. We explore two waves of the survey that were fielded on Facebook in April 2020 and December 2020. We document five facts about the impact of the pandemic on small businesses. (1) Larger firms, older firms, and male-owned firms were more likely to remain open during the early stages of the pandemic, with many of these heterogeneities persisting through the end of 2020. (2) At businesses that remained open, concerns about demand shocks outweighed concerns about supply shocks, though the relative importance of supply shocks grew over time. (3) In response to the pandemic, almost a quarter of the firms reduced their prices, with price reductions concentrated among businesses facing financial constraints and demand shocks; almost no firms raised prices. (4) Only a quarter of small businesses had access to formal sources of financing at the start of the pandemic, and access to formal financing affected how firms responded to the pandemic. (5) Increased household responsibilities affected the ability of managers and employees to focus on their work, while increased business responsibilities impacted their ability to take care of their household members. This effect persisted through December 2020 and was particularly strong for women and parents of school-aged children. We discuss how these facts inform our understanding of the economic effects of the COVID-19 pandemic and how they can help design policy responses to similar shocks.

Keywords: Small Businesses, COVID-19, Working from Home, Small Business Finance

JEL Classification: E3, L26, M13

Suggested Citation

Alekseev, Georgij and Amer, Safaa and Gopal, Manasa and Kuchler, Theresa and SCHNEIDER, JW and Stroebel, Johannes and Wernerfelt, Nils, The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (September 10, 2020). Available at SSRN: https://ssrn.com/abstract=3692733 or http://dx.doi.org/10.2139/ssrn.3692733

Georgij Alekseev

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Safaa Amer

Facebook ( email )

1601 S. California Ave.
Palo Alto, CA 94304
United States

Manasa Gopal (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

HOME PAGE: http://https://manasagopal.com/

Theresa Kuchler

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

JW SCHNEIDER

Facebook ( email )

1601 S. California Ave.
Palo Alto, CA 94304
United States

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Nils Wernerfelt

Facebook ( email )

1601 S. California Ave.
Palo Alto, CA 94304
United States

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
1,135
Abstract Views
4,287
rank
23,133
PlumX Metrics