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The Racial and Spatial Impacts of the Paycheck Protection Program

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  • T. William Lester
  • Matthew D. Wilson

Abstract

The Paycheck Protection Program (PPP), with spending of nearly $800 billion, was the largest component in the United States’ economic response to the COVID-19 pandemic. The intention of the program was to provide emergency economic relief to small businesses and help them keep employees on their payroll. Critics of the PPP program feared that its reliance on private lending institutions would exacerbate racial and spatial injustice by mirroring existing inequalities in access to capital by race and across space. The authors compare PPP to existing residential and small business lending patterns, and test whether Black and Latinx neighborhoods were disadvantaged in receiving PPP loans. The authors find that majority Black and Latinx neighborhoods received disproportionately fewer PPP loans than majority White and Asian neighborhoods, but that policy changes during the third phase of the PPP resulted in better targeting of lending to lower-income areas, minority borrowers, and smaller businesses.

Suggested Citation

  • T. William Lester & Matthew D. Wilson, 2023. "The Racial and Spatial Impacts of the Paycheck Protection Program," Economic Development Quarterly, , vol. 37(3), pages 243-258, August.
    • Handle: RePEc:sae:ecdequ:v:37:y:2023:i:3:p:243-258
    DOI: 10.1177/08912424231157693
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    References listed on IDEAS

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    Cited by:

    1. Erin M. Graves & Marybeth J. Mattingly & Howard Wial, 2023. "Introduction to the Special Issue on Inclusive Economic Development: Paycheck Protection Program," Economic Development Quarterly, , vol. 37(3), pages 207-210, August.
    2. Angela Guo & Mark E. Schweitzer, 2023. "Basic Facts on the Coverage of the Paycheck Protection Program," Working Papers 23-24, Federal Reserve Bank of Cleveland.

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