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Has the Paycheck Protection Program Succeeded?

Author

Listed:
  • Glenn Hubbard

    (Columbia University)

  • Michael R. Strain

    (American Enterprise Institute)

Abstract

Enacted March 27, 2020, the Paycheck Protection Program (PPP) was the most ambitious and creative fiscal policy response to the pandemic recession in the United States. PPP offers forgivable loans - essentially grants - to businesses with 500 or fewer employees that meet certain requirements. In this paper, we present evidence that PPP has substantially increased the employment, financial health, and survival of small businesses, using data from Dun & Bradstreet, Inc. We use event studies and standard differencein-differences models to estimate the effect of a small business applying for larger PPP loans and of a small business being eligible for PPP based on size. While our findings are informative, we believe it is too early to issue conclusive judgment on PPP's success. We offer lessons for the future from the PPP experience thus far.

Suggested Citation

  • 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.
    • Handle: RePEc:bin:bpeajo:v:51:y:2020:i:2020-03:p:335-390
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    File URL: https://www.brookings.edu/articles/has-the-paycheck-protection-program-succeeded/
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    More about this item

    Keywords

    COVID-19; Paycheck Protection Program; fiscal policy; business;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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