The Impacts of COVID-19 on Racial Inequality in Business Earnings

Robert Fairlie

No 30532, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many small businesses have closed, lost revenues, or downsized as a response to health and economic disruptions caused by COVID-19. But, were economic losses in the pandemic disproportionately felt by businesses owned by people of color? This paper provides the first study of the impacts of COVID-19 on racial inequality in business earnings. Pandemic-induced losses to business earnings in 2020 were 16-19 percent for all business owners. Racial inequality increased in the pandemic: Black business owners experienced larger negative impacts on business earnings of 12-14 percent relative to white business owners. Regression estimates for Latinx and Asian business owners reveal negative point estimates but the estimates are not statistically significant. Using Blinder-Oaxaca decompositions and a new pandemic-focused decomposition technique, I find that the industry concentrations of Black, Latinx, and Asian business owners placed each of these groups at a higher risk of experiencing disproportionate business earnings losses in the pandemic. Higher education levels among Asian business owners helped insulate them from larger losses from COVID-19. Finally, differential exposure to COVID case rates, business closure policies, and mask mandates did not contribute to racial inequality in business earnings losses.

JEL-codes: J15 J3 L26 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-ent and nep-lma
Note: LS PR
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Published as Robert Fairlie, 2024. "The impacts of COVID‐19 on racial inequality in business earnings," Journal of Policy Analysis and Management, vol 43(1), pages 258-288.

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Related works:
Journal Article: The impacts of COVID‐19 on racial inequality in business earnings (2024)
Working Paper: The Impacts of Covid-19 on Racial Inequality in Business Earnings (2023)
Working Paper: The Impacts of COVID-19 on Racial Inequality in Business Earnings (2023)
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