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An evaluation of the Paycheck Protection Program using administrative payroll microdata

Author

Listed:
  • Autor, David
  • Cho, David
  • Crane, Leland D.
  • Goldar, Mita
  • Lutz, Byron
  • Montes, Joshua
  • Peterman, William B.
  • Ratner, David
  • Villar, Daniel
  • Yildirmaz, Ahu

Abstract

The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress in response to the COVID-19 economic shock, was intended to assist small businesses to maintain employment and wages during the crisis, as well as cover other expenses. We use high-frequency administrative payroll data from ADP—one of the world’s largest payroll processing firms—to estimate the causal effect of the PPP on the evolution of employment at PPP-eligible firms relative to PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. Our estimates indicate that the PPP boosted employment at eligible firms by between 2 percent to 5 percent at its peak effect around mid-May 2020. The boost to employment waned thereafter and ranged from no effect to a 3 percent boost at the end of 2020. Our estimates imply that employers retained an additional 3.6 million jobs as of mid-May 2020, and 1.4 million jobs at the end of 2020, as a consequence of PPP. The estimated cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings.

Suggested Citation

  • Autor, David & Cho, David & Crane, Leland D. & Goldar, Mita & Lutz, Byron & Montes, Joshua & Peterman, William B. & Ratner, David & Villar, Daniel & Yildirmaz, Ahu, 2022. "An evaluation of the Paycheck Protection Program using administrative payroll microdata," Journal of Public Economics, Elsevier, vol. 211(C).
    • Handle: RePEc:eee:pubeco:v:211:y:2022:i:c:s0047272722000664
    DOI: 10.1016/j.jpubeco.2022.104664
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    1. Falk Bräuning & Teodora Paligorova, 2021. "Uptake of the Main Street Lending Program," FEDS Notes 2021-04-16-1, Board of Governors of the Federal Reserve System (U.S.).
    2. Glenn Hubbard & Michael R. Strain, 2020. "Has the Paycheck Protection Program Succeeded?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(3 (Fall)), pages 335-390.
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    More about this item

    Keywords

    Paycheck Protection Program; COVID-19; Fiscal Policy;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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