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Did the COVID-19 pandemic zombify the economy? A look at zombie firms

Author

Listed:
  • Alexander Amundsen
  • Amélie Lafrance-Cooke
  • Danny Leung

Abstract

Zombie firms are businesses that persistently perform poorly over time without exiting, and their prevalence has been rising over time across many advanced economies. They negatively affect economic growth as they tend to be unproductive and compete with other healthy firms for scarce resources. In Canada, while the share of zombie firms was falling leading up to the COVID-19 pandemic, they were becoming less productive over time, were negatively affecting healthy firms and were increasingly lowering aggregate productivity. In 2019, aggregate productivity would have been up to 5% higher had zombie firms exited (Amundsen et al., 2023).

Suggested Citation

  • Alexander Amundsen & Amélie Lafrance-Cooke & Danny Leung, 2025. "Did the COVID-19 pandemic zombify the economy? A look at zombie firms," Economic and Social Reports 202500100002e, Statistics Canada, Analytical Studies and Modelling Branch.
    • Handle: RePEc:stc:stcp8e:202500100002e
    DOI: https://doi.org/10.25318/36280001202500100002-eng
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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