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Which European firms were hardest hit by COVID-19?

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Listed:
  • Coad, Alexander
  • Bauer, Péter
  • Domnick, Clemens
  • Harasztosie, Péter
  • Pál, Rozália
  • Teruel, Mercedes

Abstract

The COVID-19 shock hit firms hard, on average, but how did it hit in the distribution of firms, differently between the high-growth superstars and the firms that were already struggling to survive? This paper implements graphical techniques and quantile regression to analyse the effect of the COVID-19 shock across the distribution of firms. It impacted negatively the growth of sales and value added all across the growth rate distribution with an effect that was slightly larger at the lower quantiles. For employment growth, while the effect was null for most firms, it was not at the lower tail. Analysis of subsamples, as well as quantile regressions with interaction terms, emphasize that firms that received policy support and those from the service sector were relatively more strongly affected by the COVID-19 shock, especially those that were fast decreasing ones. The results confirm the view that the COVID-19 policy support reached the intended recipients.

Suggested Citation

  • Coad, Alexander & Bauer, Péter & Domnick, Clemens & Harasztosie, Péter & Pál, Rozália & Teruel, Mercedes, 2023. "Which European firms were hardest hit by COVID-19?," EIB Working Papers 2023/05, European Investment Bank (EIB).
    • Handle: RePEc:zbw:eibwps:202305
    DOI: 10.2867/551079
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    References listed on IDEAS

    as
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    Keywords

    Firm growth; growth rates distribution; COVID-19 shock; quantile regression; hanging rootogram;
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