The Impact of COVID-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey

Robert Fairlie

No 13311, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Social distancing restrictions and demand shifts from COVID-19 are expected to shutter many small businesses, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 CPS – the first month fully capturing early effects from the pandemic. The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses. African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of losses. Immigrant business owners experienced substantial losses of 36 percent. Female-owned businesses were also disproportionately hit by 25 percent. These findings of early-stage losses to small businesses have important policy implications and may portend longer-term ramifications for job losses and economic inequality.

Keywords: shelter in place; coronavirus; COVID-19; self-employment; entrepreneurship; small business; social distancing (search for similar items in EconPapers)
JEL-codes: J15 J16 L26 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020-05
New Economics Papers: this item is included in nep-ent, nep-ino, nep-sbm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67)

Published - published as 'The impact of COVID-19 on small business owners: Evidence from the first three months after widespread social-distancing restrictions' in: Journal of Economics and Management Strategy, 2020, 29 (4), 727-740

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Related works:
Working Paper: The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey (2020)
Working Paper: The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey (2020)
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