Will Schumpeter Catch COVID-19?

25 Pages Posted: 1 Mar 2021

See all articles by Mathieu Cros

Mathieu Cros

Université Paris Dauphine

Anne Epaulard

Université Paris IX Dauphine

Philippe Martin

Sciences Po

Date Written: February 2021


We estimate the factors predicting firm failures in the COVID crisis based on French data in 2020. Although the number of firms filling for bankruptcy was much below its normal level (- 36% compared to 2019) the same factors that predicted firm failures (primarily productivity and debt) in 2019 are at work in a similar way as in 2020. Hence, the selection process, although much reduced, has not been distorted in 2020. At this stage, partial hibernation rather than zombification characterises the selection into firm survival or failure. We also find that the sectoral heterogeneity of the turnover COVID shock (proxied by the change in credit card transactions) has been largely (but not fully) absorbed by public policy support because it predicts little of the probability of bankruptcy at the firm level. Finally, we sketch some potential scenarios for 2021-2022 for different sectors based on our empirical estimates of predictors of firm failures.

Suggested Citation

Cros, Mathieu and Epaulard, Anne and Martin, Philippe, Will Schumpeter Catch COVID-19? (February 2021). Available at SSRN: https://ssrn.com/abstract=3795217

Mathieu Cros (Contact Author)

Université Paris Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775

Anne Epaulard

Université Paris IX Dauphine ( email )

223 Rue Saint-Honore
Paris, 75775

Philippe Martin

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337

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