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

24 Pages Posted: 9 Jun 2020

See all articles by Robert W. Fairlie

Robert W. Fairlie

UCLA; National Bureau of Economic Research

Multiple version iconThere are 2 versions of this paper

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: small business, entrepreneurship, self-employment, COVID-19, coronavirus, shelter in place, social distancing

JEL Classification: J15, J16, L26

Suggested Citation

Fairlie, Robert W., The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey. IZA Discussion Paper No. 13311, Available at SSRN: https://ssrn.com/abstract=3620625 or http://dx.doi.org/10.2139/ssrn.3620625

Robert W. Fairlie (Contact Author)

UCLA ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/robert_fairlie?page=1&perPage=50

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
53
Abstract Views
561
Rank
343,436
PlumX Metrics