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Business creation during Covid-19

Saleem Bahaj (), Sophie Piton () and Anthony Savagar ()
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Saleem Bahaj: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Anthony Savagar: University of Kent and Centre for Macroeconomics

No 981, Bank of England working papers from Bank of England

Abstract: We use data on business registrations in the UK to study the response of firm entry to the Covid-19 pandemic. We find that firm entry increased during the pandemic, unlike typical recessions where firm entry declines. The rise in firm creation is driven by individual entrepreneurs creating companies for the first time, and particularly creating companies in online retail. We link the rise in firm creation to declines in brick-and-mortar retail footfall via Google mobility data, and show that it takes 10 weeks for a firm to be registered after a shock to footfall. To study the impacts of the newly created firms, we merge entry data with online job postings from Indeed and show that the rise in firm creation drives increased vacancy postings. However, we also show there is a higher probability of pandemic startups dissolving relative to pre-pandemic cohorts. Therefore, we conclude that booming firm creation aided the rapid recovery of the UK economy in the short run, but the long-run implications are more uncertain.

Keywords: Firm dynamics; Covid-19; business dynamism; firm entry. (search for similar items in EconPapers)
JEL-codes: E32 L25 L26 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2022-05-20
New Economics Papers: this item is included in nep-bec, nep-ent, nep-eur, nep-ind, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0981

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