IDEAS home Printed from https://ideas.repec.org/p/cep/poidwp/061.html
   My bibliography  Save this paper

The impact of COVID-19 on productivity

Author

Listed:
  • Nicholas Bloom
  • Philip Bunn
  • Paul Mizen
  • Pawel Smietanka
  • Gregory Thwaites

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 1.4% negative impact on TFP.

Suggested Citation

  • Nicholas Bloom & Philip Bunn & Paul Mizen & Pawel Smietanka & Gregory Thwaites, 2022. "The impact of COVID-19 on productivity," POID Working Papers 061, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:poidwp:061
    as

    Download full text from publisher

    File URL: https://poid.lse.ac.uk/textonly/publications/downloads/poidwp061.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544.
    2. Benjamin F. Jones, 2009. "The Burden of Knowledge and the "Death of the Renaissance Man": Is Innovation Getting Harder?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 283-317.
    3. Simon Mongey & Laura Pilossoph & Alex Weinberg, 2020. "Which Workers Bear the Burden of Social Distancing Policies?," Working Papers 2020-51, Becker Friedman Institute for Research In Economics.
    4. Nicholas Bloom & Charles I. Jones & John Van Reenen & Michael Webb, 2020. "Are Ideas Getting Harder to Find?," American Economic Review, American Economic Association, vol. 110(4), pages 1104-1144, April.
    5. Olivier Coibion & Yuriy Gorodnichenko & Saten Kumar, 2018. "How Do Firms Form Their Expectations? New Survey Evidence," American Economic Review, American Economic Association, vol. 108(9), pages 2671-2713, September.
    6. Forsythe, Eliza & Kahn, Lisa B. & Lange, Fabian & Wiczer, David, 2020. "Labor demand in the time of COVID-19: Evidence from vacancy postings and UI claims," Journal of Public Economics, Elsevier, vol. 189(C).
    7. Oscar Jorda & Sanjay R. Singh & Alan M. Taylor, 2022. "Longer-Run Economic Consequences of Pandemics," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 166-175, March.
    8. Raj Chetty & John N Friedman & Michael Stepner & Opportunity Insights Team & Camille Baker & Harvey Barnhard & Matt Bell & Gregory Bruich & Tina Chelidze & Lucas Chu & Westley Cineus & Sebi Devlin-Fol, 2024. "The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 829-889.
    9. Valerie Cerra & Sweta Chaman Saxena, 2008. "Growth Dynamics: The Myth of Economic Recovery," American Economic Review, American Economic Association, vol. 98(1), pages 439-457, March.
    10. Olivier Coibion & Yuriy Gorodnichenko, 2012. "What Can Survey Forecasts Tell Us about Information Rigidities?," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 116-159.
    11. Alexander W. Bartik & Zoe B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton, 2020. "What Jobs are Being Done at Home During the Covid-19 Crisis? Evidence from Firm-Level Surveys," NBER Working Papers 27422, National Bureau of Economic Research, Inc.
    12. Alon, Titan & Doepke, Matthias & Olmstead-Rumsey, Jane & Tertilt, Michèle, 2020. "This Time It's Different: The Role of Women's Employment in a Pandemic Recession," IZA Discussion Papers 13562, Institute of Labor Economics (IZA).
    13. John G. Fernald & J. Christina Wang, 2016. "Why Has the Cyclicality of Productivity Changed? What Does It Mean?," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 465-496, October.
    14. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    15. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    16. Dimitris Papanikolaou & Lawrence D W Schmidt, 2022. "Working Remotely and the Supply-Side Impact of COVID-19 [The unprecedented stock market reaction to COVID-19]," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 12(1), pages 53-111.
    17. Laurence Ball, 2014. "Long-term damage from the Great Recession in OECD countries," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 149-160, September.
    18. Georgij Alekseev & Safaa Amer & Manasa Gopal & Theresa Kuchler & JW Schneider & Johannes Stroebel & Nils Wernerfelt, 2020. "The Effects of Covid-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees," CESifo Working Paper Series 8578, CESifo.
    19. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    20. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    21. Pierre-Olivier Gourinchas & Ṣebnem Kalemli-Özcan & Veronika Penciakova & Nick Sander, 2020. "SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis," NBER Working Papers 27877, National Bureau of Economic Research, Inc.
    22. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    23. Pierre-Olivier Gourinchas & Ṣebnem Kalemli-Özcan & Veronika Penciakova & Nick Sander, 2020. "COVID-19 and SME Failures," FRB Atlanta Working Paper 2020-21, Federal Reserve Bank of Atlanta.
    24. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    25. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    26. Altig, Dave & Baker, Scott & Barrero, Jose Maria & Bloom, Nicholas & Bunn, Philip & Chen, Scarlet & Davis, Steven J. & Leather, Julia & Meyer, Brent & Mihaylov, Emil & Mizen, Paul & Parker, Nicholas &, 2020. "Economic uncertainty before and during the COVID-19 pandemic," Journal of Public Economics, Elsevier, vol. 191(C).
    27. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
    28. Erik Brynjolfsson & John J. Horton & Adam Ozimek & Daniel Rock & Garima Sharma & Hong-Yi TuYe, 2020. "COVID-19 and Remote Work: An Early Look at US Data," NBER Working Papers 27344, National Bureau of Economic Research, Inc.
    29. Catherine Buffington & Carrie Dennis & Emin Dinlersoz & Lucia Foster & Shawn Klimek, 2020. "Measuring the Effect of COVID-19 on U.S. Small Businesses: The Small Business Pulse Survey," Working Papers 20-16, Center for Economic Studies, U.S. Census Bureau.
    30. John Asker & Allan Collard-Wexler & Jan De Loecker, 2014. "Dynamic Inputs and Resource (Mis)Allocation," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 1013-1063.
    31. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    32. Altig, David & Barrero, Jose Maria & Bloom, Nicholas & Davis, Steven J. & Meyer, Brent & Parker, Nicholas, 2022. "Surveying business uncertainty," Journal of Econometrics, Elsevier, vol. 231(1), pages 282-303.
    33. Simon Mongey & Laura Pilossoph & Alexander Weinberg, 2021. "Which workers bear the burden of social distancing?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 509-526, September.
    34. Nicholas Bloom & Robert S. Fletcher & Ethan Yeh, 2021. "The Impact of COVID-19 on US Firms," NBER Working Papers 28314, National Bureau of Economic Research, Inc.
    35. David Baqaee & Emmanuel Farhi, 2022. "Supply and Demand in Disaggregated Keynesian Economies with an Application to the COVID-19 Crisis," American Economic Review, American Economic Association, vol. 112(5), pages 1397-1436, May.
    36. Alexander W. Bartik & Marianne Bertrand & Zoe Cullen & Edward L. Glaeser & Michael Luca & Christopher Stanton, 2020. "The impact of COVID-19 on small business outcomes and expectations," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 117(30), pages 17656-17666, July.
    37. Amat Adarov & David Klenert & Robert Marschinski & Robert Stehrer, 2022. "Productivity drivers: empirical evidence on the role of digital and intangible capital, FDI and integration," Applied Economics, Taylor & Francis Journals, vol. 54(48), pages 5515-5531, October.
    38. Barnett, Alina & Chiu, Adrian & Franklin, Jeremy & Sebastia-Barriel, Maria, 2014. "The productivity puzzle: a firm-level investigation into employment behaviour and resource allocation over the crisis," Bank of England working papers 495, Bank of England.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daiji Kawaguchi & Sagiri Kitao & Manabu Nose, 2022. "The impact of COVID-19 on Japanese firms: mobility and resilience via remote work," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(6), pages 1419-1449, December.
    2. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    3. Barrero, Jose Maria & Bloom, Nick & Davis, Steven J., 2020. "Why Working From Home Will Stick," SocArXiv wfdbe, Center for Open Science.
    4. Nicholas Bloom & Robert S. Fletcher & Ethan Yeh, 2021. "The Impact of COVID-19 on US Firms," NBER Working Papers 28314, National Bureau of Economic Research, Inc.
    5. Hensvik, Lena & Le Barbanchon, Thomas & Rathelot, Roland, 2021. "Job search during the COVID-19 crisis," Journal of Public Economics, Elsevier, vol. 194(C).
    6. Lena Anayi & Nicholas Bloom & Philip Bunn & Paul Mizen & Gregory Thwaites & Ivan Yotzov, 2022. "Firming up price inflation," POID Working Papers 058, Centre for Economic Performance, LSE.
    7. Alexander Bick & Adam Blandin & Karel Mertens, 2023. "Work from Home before and after the COVID-19 Outbreak," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 1-39, October.
    8. Gu, Ran & Zhong, Ling, 2023. "Effects of stay-at-home orders on skill requirements in vacancy postings," Labour Economics, Elsevier, vol. 82(C).
    9. Ali Zarifhonarvar, 2023. "A Survey on the Impact of Covid-19 on the Labor Market," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 9(1), pages 1-10, 03-2023.
    10. Cerqua, Augusto & Letta, Marco, 2022. "Local inequalities of the COVID-19 crisis," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    11. Luca Bonacini & Giovanni Gallo & Sergio Scicchitano, 2021. "Working from home and income inequality: risks of a ‘new normal’ with COVID-19," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(1), pages 303-360, January.
    12. Zarifhonarvar, Ali, 2022. "A Survey on the Impact of Covid-19 on the Labor Market," EconStor Preprints 265549, ZBW - Leibniz Information Centre for Economics.
    13. Blanas, Sotiris & Oikonomou, Rigas, 2023. "COVID-induced economic uncertainty, tasks and occupational demand," Labour Economics, Elsevier, vol. 81(C).
    14. Alipour, Jean-Victor & Fadinger, Harald & Schymik, Jan, 2021. "My home is my castle – The benefits of working from home during a pandemic crisis," Journal of Public Economics, Elsevier, vol. 196(C).
    15. Christian Kagerl & Julia Starzetz, 2023. "Working from home for good? Lessons learned from the COVID-19 pandemic and what this means for the future of work," Journal of Business Economics, Springer, vol. 93(1), pages 229-265, January.
    16. Kong, Edward & Prinz, Daniel, 2020. "Disentangling policy effects using proxy data: Which shutdown policies affected unemployment during the COVID-19 pandemic?," Journal of Public Economics, Elsevier, vol. 189(C).
    17. Bloom, Nicholas & Davis, Steven J. & Hansen, Stephen & Lambert, Peter John & Sadun, Raffaella & Taska, Bledi, 2023. "Remote work across jobs, companies and space," LSE Research Online Documents on Economics 121302, London School of Economics and Political Science, LSE Library.
    18. Barry, John W. & Campello, Murillo & Graham, John R. & Ma, Yueran, 2022. "Corporate flexibility in a time of crisis," Journal of Financial Economics, Elsevier, vol. 144(3), pages 780-806.
    19. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2022. "Work that can be done from home: evidence on variation within and across occupations and industries," Labour Economics, Elsevier, vol. 74(C).
    20. Alipour, Jean-Victor & Falck, Oliver & Schüller, Simone, 2023. "Germany’s capacity to work from home," European Economic Review, Elsevier, vol. 151(C).

    More about this item

    Keywords

    impact; Covid-19; productivity; innovation; quantitative; TFP; forecasts; heterogeneity;
    All these keywords.

    JEL classification:

    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:poidwp:061. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://poid.lse.ac.uk/publications/working-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.