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The impact of Covid-19 on productivity

Nicholas Bloom (), Philip Bunn (), Paul Mizen (), Pawel Smietanka () and Gregory Thwaites ()
Additional contact information
Philip Bunn: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Pawel Smietanka: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Gregory Thwaites: University of Nottingham

No 900, Bank of England working papers from Bank of England

Abstract: We analyse the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted CEOs’ time spent on dealing with the pandemic.

Keywords: Productivity; reallocation; Covid-19; growth (search for similar items in EconPapers)
JEL-codes: O32 O33 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020-12-21
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-hrm, nep-ino and nep-tid
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Related works:
Working Paper: The Impact of Covid-19 on Productivity (2020) Downloads
Working Paper: The impact of Covid-19 on productivity (2020) Downloads
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