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The impact of Covid-19 on productivity

Author

Listed:
  • Nicholas Bloom

    (Stanford University)

  • Philip Bunn

    (Bank of England)

  • Paul Mizen

    (University of Nottingham)

  • Pawel Smietanka

    (Deutsche Bundesbank)

  • Gregory Thwaites

    (University of Nottingham)

Abstract

We analyse the impact of Covid-19 on productivity using data from an innovative monthly firm survey panel that asks for quantitative impacts of Covid on inputs and outputs. We find total factor productivity (TFP) fell by up to 5% during 2020–21. The overall impact combined large reductions in ‘within-firm’ productivity, with an offsetting positive ‘between-firm’ effects as less productive sectors, and less productive firms within them, contracted. Despite these large pandemic effects, firms’ post-Covid forecasts imply surprisingly little lasting impact on aggregate TFP. We also see significant heterogeneity over firms and sectors, with the greatest impacts in those requiring extensive in-person activity. We also ask about unmeasured inflation in the form of deteriorating product quality, finding an additional 1.3% negative impact on TFP.

Suggested Citation

  • Nicholas Bloom & Philip Bunn & Paul Mizen & Pawel Smietanka & Gregory Thwaites, 2020. "The impact of Covid-19 on productivity," Bank of England working papers 900, Bank of England.
    • Handle: RePEc:boe:boeewp:0900
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    References listed on IDEAS

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    More about this item

    Keywords

    Productivity; reallocation; Covid-19; growth;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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