Data and Code for: The $800 Billion Paycheck Protection Program: Where Did the money Go and Why Did it Go There?

Principal Investigator(s): View help for Principal Investigator(s) David Autor, Massachusetts Institute of Technology; David Cho, Federal Reserve Board; Leland D. Crane, Federal Reserve Board; Mita Goldar, Unaffiliated; Byron Lutz, Federal Reserve Board; Joshua Montes, Federal Reserve Board; William B. Peterman, Federal Reserve Board; David Ratner, Federal Reserve Board; Daniel Villar, Federal Reserve Board; Ahu Yildirmaz, Coleridge Initiative

Version: View help for Version V1

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jep_readme.pdf	application/pdf	221.1 KB	04/01/2022 07:27:AM

Project Citation:

Autor, David, Cho, David, Crane, Leland D., Goldar, Mita, Lutz, Byron, Montes, Joshua, … Yildirmaz, Ahu. Data and Code for: The $800 Billion Paycheck Protection Program: Where Did the money Go and Why Did it Go There? Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-05-02. https://doi.org/10.3886/E157742V1

Project Description

Summary: The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 93 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 to 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. These estimates imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. This compares unfavorably to the other two major pandemic aid programs, enhanced UI benefits and Economic Impact Payments (i.e. stimulus checks). PPP's breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise. The more targeted pandemic business aid programs deployed by other high-income countries exemplify what is feasible with better administrative systems. We discuss how the United States could build capacity in state unemployment systems that would serve workers and businesses both in normal times and during the next crisis.

Funding Sources: Smith Richardson Foundation (20202252); Accenture LLP (027843-0001); Andrew Carnegie Fellowship (G-F-19-56882); Washington Center for Equitable Growth (APP-01666)

Scope of Project

Subject Terms: Government Programs; Employment; COVID-19

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H32 Fiscal Policies and Behavior of Economic Agents: Firm
      H81 Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

Geographic Coverage: United States

Time Period(s): 2020 – 2021

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Published Versions

V1 [2022-05-02]

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